It is hard to understand how the executives of the auto companies and their vendors could be so dumb.
They just couldn't resist the temptation to save a few cents per part in return for losing control of their suppliers, and the technology needed to make their vehicles.
There is dumb, and then there is that business decision.
Vertical integration worked well for GM back in the 50s and 60s but they discovered that non-union suppliers could make sub-systems and parts a lot cheaper.