Originally Posted by Lug

I think it's more a bit of both. The reason GM can't build a cheap car well is that union costs cause a car to be around $1500 more than a non-union built car. So, if you are selling a $50,000 Escalade, that cost is almost negligable. If you are trying to sell a $12,000 economy car, that is a very large percentage of the cost of the car and has to come out of the cost of building it. GM is a huge behemoth and moves slowly to react, but they are also at such a competitive disadvantage on the low end, they have to sell bigger, more expensive vehicles to reduce the cost difference.

You will also notice that the amount of trouble each car manufacturer is directly propotional to it's labor costs.