Sending a message from the top
The year was 1987 and the domestic automakers had finally resigned themselves to the fact that the Japanese were here to stay. What began as a trend in California and was perceived as consumers' knee-jerk response to the gasoline shortages of the '70s had taken root across the country. To the domestic automakers' dismay, even after gas prices stabilized, cars such as the Honda Civic and Toyota Corolla continued to gain share not only on the West Coast, but also in small Midwestern towns that traditionally bought American.
Although the loss of share was daunting, the domestic automakers believed their problem was self-limiting. "Okay," they thought, "Americans may have fallen in love with small economy cars from Japan, but the Japanese will never be able to sell a large car in this country." And this was a comforting thought, because small cars were a loss leader for domestic automakers. Their real profits came from the larger, option-laden vehicles, which they felt were immune from Japanese attack. And so the executives from the Big Three went to bed at night content that although they may be losing the battle for small cars, they would still win the war for corporate profits and market dominance in the end.
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