What Really Ails the U.S. Auto Industry

GENERAL MOTORS, FORD, and Chrysler have improved car quality so much that several of their models are now as well made as anything the Japanese offer. And through their discounts and financing deals they now offer the lowest prices. Yet they still steadily lose market share to the Japanese.

Detroit has also sharply reduced costs; some new Ford plants in the U.S. and in Mexico may now be the world’s lowest-cost producers. Yet the Big Three are losing money hand over fist while the leading Japanese companies are profitable. All three—again with Ford in the lead—have sharply reduced the ...

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