What is the state of the domestic auto market? Around a year ago, American auto makers hit an all time low in sales. As gas prices soared, failure to produce fuel efficient vehicles to contend with foreign innovations led to a national recession.
After WWII, the factories that had been producing military equipment moved their focus elsewhere. Having a car became a "necessary luxury" and a true status symbol. Many domestic auto makers flourished at this time. There wasn't any foreign competition.
The late 50's then brought European cars with a differing style that just screamed class. Enter Mercedes, Jaguar, MG, and Triumph. These cars were generally smaller sports car that challenged the likes of the new Chevrolet Corvette and Ford Thunderbird. The invasion took a small nibble out of the American companies, but nothing to do major damage.
Then the 60's roll in. Large cars with round bodies and fins fall to straight lines and less flashy designs. The 60's also saw the introduction of the first true compact cars in the forms of the Studebaker Lark, Ford Falcon, American Motors Rambler, Chevrolet Corvair, and the Plymouth Valiant. Around this time, Carroll Shelby comes up with the idea of dropping a large engine into a little car (The Cobra). This leads to the birth of the muscle car: compact cars with giant V8 engines. Teens who wanted to go fast (all of them) snatched these cars up. The American industry comes out on top.
Meanwhile, imports such as Hondas, Toyotas, and Datsuns had slowly crept in to the American market. They were seen as disposable economy cars and nothing more. Japanese designers begin catching on to American design techniques. The 1970 Toyota Celica shared many of the same design elements with the Ford Mustang. As they slowly grew in popularity, one thing held them back: lack of performance.
The game then changes. A gas shortage forces prices on fuel upward and a limit is put on the amount of fuel you can buy. Gas guzzling muscle cars become impractical. The four cylinders engines in the Jap cars become more popular. The idea of "fuel efficiency" has forever changed the automotive industry.
The 80's and 90's were a drab and boring time for the American car companies. AMC dies, Chrysler takes over Jeep, cars are looking alike and they all seem to have lackluster engines. Import sales skyrocket leaving the Americans in the dust.
That all may be changing soon. The Big Three Automakers in the U.S. are making a change. Alternative fuel and more efficient engines are being developed. Ford, after never needing declare bankruptcy, is leading the charge with all new Ecoboost line of engines. The new Ford Fiesta may be the biggest competitor the import compacts have ever seen.