Foreign automakers are scrambling to compete with Detroit in the United States, the market where many of them still earn their most reliable profits. Pressure is mounting from cheaper Chinese vehicles, which are undercutting prices across global markets and threatening to erode the margins that foreign brands have long enjoyed in America.
American consumers' longstanding love of big vehicles, including pickups and large sport utility vehicles, has made the U.S. the most lucrative destination for manufacturers worldwide. Models that sell at premium prices in the American market often generate far greater returns than similar cars sold elsewhere, leaving global carmakers reluctant to give up ground there.
Detroit's automakers have long dominated this segment, and their established dealer networks, loyal buyers and strong truck lineups have made it difficult for rivals to gain traction. Foreign brands have responded with new models, expanded trucks and SUVs, and more aggressive pricing, but the competition has grown tougher as the cost of building and marketing vehicles rises.
The stakes are high. As growth slows in Europe and China's car market becomes more crowded and price-driven, the United States remains one of the few major markets where carmakers can still count on healthy profits. For many global manufacturers, winning or holding share in America is now seen as essential to their financial future.
Source: Wall Street Journal US Business · Summarized by HeadlinesBriefing