Even though auto sales are close to a record high in the United States, the American auto industry isn’t doing too great. This is because American automakers now have too many factories. And these factoriesmake cars that Americans don’t really want anymore.

Auto plants in the U.S. have the capacity to make more cars than they can sell. This is the reason GM is closing four plants. And Ford is doing a major reorganization.

Why is there such excess capacity? One reason is that foreign automakers built new auto plants in the U.S. for over three decades. Foreign car manufacturers operate 19 auto assembly plants in the U.S. And that number is growing. Volvo, Toyota, Mazda, and BMW have all opened or are in the process of building plants on U.S. soil.

The plants helped double foreign automakers’ share of the American market over the last three decades. Foreign companies now sell over half of the vehicles sold in the United States. Moreover, that market share has come at the expense of American automakers.

Kristen Dziczek of the Center for Auto Research says that everyone has unused capacity. For example, half of GM’s 12 assembly lines now operate at 80% below capacity. That’s generally considered the break-even point for a plant’s profitability.

Car Sales Slip

Back in 2016, car sales in the States were at a record high. However, U.S. auto sales were down 5% last year. If the economy slows, that number is likely to fall even more.

People Love SUVs Now

Another reason for the supply glut is consumers’ changing tastes. Car buyers have recently shifted from purchasing traditional sedans to buying popular SUVs and trucks. This leaves some plants building cars over the demand for them.

Imports

Vehicle imports to the US are another factor at play. President Trump has blamed European and Asian imports for GM’s closure of US plants. However, imports are not the largest source of competition for US plants. Most cars sold in the United States are actually made here. In addition, most vehicles from Asia and Europe are car models. As Americans continue to prefer SUVs and trucks, they will likely cut back on overseas imports.