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Actually it has very little to do with either of those factors.
The american car companies are paying about 2 as much per employee overall and still trying to compete.
The branches of those companies that are showing viability are the ones not under union control. Detroit will die so long as they hold retarded union contracts.
SUVs and trucks are still the biggest sellers in 2008 and 2009. Its really not that their cars aren't selling its that they are paying too much out to people who do nothing(labor banks ridiculous pensions and so on.)
If you cut all of their employee pay packages to what Honda, Toyota, Kia or Hyundai pays per employee then they are viable market performers.
Its flatout myopic to claim its because they only manufacture "dumb" cars. I totally agree that the US autoindustry slacked off for about 20 years and made cars that were designed to fall apart after 100K miles so you would have to buy a new one or bring it to a dealer(most of the money that a dealership brings in is its service department, the scamming they pull on credit rates and fees is to keep the cash flow moving between major ripjobs.)
Still despite crappy cars from two decades ago people still buy them. Ford is actually still squeaking by because it pays just slightly less than GM and Chrysler on its union contracts and thats all it needed to avoid any outside assistance. Any organization that has had organized labor for more than 30-40 years has either gone under and moved or gone under and reorganized its contracts to be more reasonable. UPS even has problems and cannot compete with Fedex due to labor restrictions.
That said Ford is pretty ridiculous versatile, considering they put out new models that I don't even see advertised until well after I have seen them drive by. I'm pretty well informed and they still manage to dump new vehicles on the market. Also the US auto industry is one of the first manufacturers to put serious research into GDI and even deploy it in non-luxury "normal" cars(Chevy cobalt).
That said they are catching on that it needs to be FE friendly as well as have all the other features and they are coming along pretty well in that direction.
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