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Oh, the good old '50s and '60s, when the so-called "Big Three" in the auto market were really the Detroit Three -- General Motors, Ford, and Chrysler.
The idea of competition from Japan or South Korea was laughed at back then. Sure, there were some rumblings from Europe with their Fiats, Mercedes-Benz, Porsches, and Volkswagens, . But American car makers... we were kings. The phrase, "They'll buy anything we build" appeared to be truth.
And at least two of the Big Three were doing well in the luxury market. Ford had its Lincoln brand and GM had its Caddies.
So, what happened between then and now? If you divide the luxury car market into three sections -- the very top (price range -- $150,000 to $400,000), the middle (price range -- $70,000 to $120,000), and the low luxury level (price range -- below $70,000) -- the American car makers are not making as much as an impact against their European and Japanese rivals. So says Jerry Flint of Forbes.com.
There is not one single entry in the very top section from the Detroit manufacturers. This level of the luxury car business has been left to Maybach, Rolls Royce, and Bentley.
BMW, Lexus, and Mercedes-Benz, dominate the middle level. There are some American representation here provided by the Corvette Z06 and the Cadillac XLR roadster. But sales are lagging for both when compared to the others.
Finally, in the below $70,000 range -- what Flint calls the "near luxury" segment -- the winning models appear to be the Audi 6, the BMW 5-Series, and the Mercedes E Class. While Cadillac had a presence in this field, sales were down last year and are off 7 percent through the first five months of this year.
So what happened? Many things. Flint argues, for example, that Detroit lost the luxury segments of the market because Cadillac was too busy focusing on volume in the '70s and '80s. As Cadillac went volume, the Japanese came up with high-end, exclusive (read: pricey) sedans like the Lexus LS to match the Germans Mercedes S-Class, BMW 7-Series, and the Audi A8. Also, over an evolutionary process, European car makers gained market share with cars that focused on ride, handling, and engineering. The Japanese , on the other hand, entered the battle with cars that offered quality, value and economy. Meanwhile, the American car makers decided it would be best to chase after the truck and SUV trend, leaving their small cars and sedans to languish until Hurricane Katrina.
More details can be found in the link above. Our take? So there you have it. The demise of the American luxury car manufacturer. It was fed by bad decisions and a little touch of arrogance. Remember that adage, "They'll buy anything." Well, that moved from truth to smugness.
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