Can the U.S. Auto Industry Bounce Back?

Feb. 3, 2006 — -- Americans are buying more foreign cars than ever, and U.S. automakers are seeing their share of sales drop.

Analysts expect Toyota's Camry to remain the nation's best-selling car this year, and Toyota is pushing to supplant General Motors as the world's largest automaker.

Last year, the "Big Detroit Three" lost more than $6 billion in North America. These sagging sales mean tens of thousands of layoffs are coming. As gas prices go up, Americans are turning away from big sport utility vehicles that took over the highways in recent years, and drove up big profits in Detroit.

"What they need to do is really to boil it down into cars that people want to buy," said Jean Jennings, Automobile Magazine's editor in chief.

Eric Ridenour, chief operating officer of the Chrysler Group, agreed.

"The first thing we have to do is have a great product, and we've done that," he said.

The Chrysler 300 and Crossfire seem to be generating the "got-to-have" buzz that have some Americans buying again. So has Ford's Mustang -- this muscle car's retro styling appeals to baby boomers who grew up with it.

But the competition is tough. Japanese automakers are increasing their sales faster than Detroit.

"There's more and more competition," Ridenour said. "We had Europe first and Japan and now China."

At one time, it was widely believed that foreign cars were superior to American cars, and that lingering perception continues to hurt Detroit's sales.

"I think the facts are we're all very, very close in quality," Ridenour said. "It takes a long time for perception to change."

Chrysler has been "holding fairly steady" throughout the downturn, Ridenour said, with sales for January up 5 percent compared to last year.

"I'm confident the industry will come back," he said.

For this to happen, the automakers have to focus on the product, Jennings said.

"This is all about cars. It's all about the product. They must come out with absolutely perfect vehicles, exciting vehicles, vehicles with exceptional quality, one vehicle after another," she said.