OSHAWA, ONT. -- The first Big Three vehicle to disappear from Richard Zurawski's driveway was a 1994 Buick Regal, replaced by a 1999 Nissan Maxima. Then a Dodge Caravan minivan rolled out and a 2003 Honda Odyssey rolled in.

Now the pair have been joined by a 2003 Honda Civic, completing the exile of Big Three vehicles from the family's Toronto home.

"I'll take reliability over looks," Mr. Zurawski says, summing up in five words one of the key issues in the battle for the hearts and minds of North American car buyers.

Driveway by driveway across North America, the auto market is being turned upside down in a fundamental restructuring that is dominating auto industry chatter from Tokyo to Stuttgart and causing sleepless nights in Detroit.

Market share for the once-dominant Big Three has fallen so far, for so long, that executives, analysts and even dealers are wondering whether they can stop the slide, let alone reverse it.

Over the past 24 months, Ford Motor Co., General Motors Corp. and the Chrysler unit of DaimlerChrysler AG have shown a startling and disturbing inability to hold their own, despite interest-free financing, free DVD players, free golf clubs or thousands of dollars in rebates.

Since Oct. 1, 2001, when GM introduced a massive program of interest-free loans designed to kick-start its own sales and the U.S. economy after the 9/11 terrorist attacks -- matched and at times exceeded by Chrysler and Ford in the past two years -- all three companies have lost market share in both Canada and the United States.

Their year-to-date share of the U.S. market fell to 60 per cent in September from 65 per cent as of Oct. 1, 2001, when GM jolted the market with its Keep America Rolling incentive program. In Canada, their share stood at 61.2 per cent as of that date. It fell to 57 per cent at the end of September, 2003.

The biggest customer incentives on record did not stop the bleeding.

There is no simple explanation for that. But one reason behind the shift in market share appears to be the quality of the vehicles offered by the three companies.

Big Three quality doesn't seem to match that of Honda Motor Co. Ltd. or Toyota Motor Corp., or at the very least, consumers think it still lags.

Consider Mr. Zurawski's experience with his white 1996 Caravan.

When he picked it up, he discovered the paint was faulty. At 160,000 kilometres, the driveshaft bearings were shot and he was told he needed a new engine.

"I'll never buy a Chrysler again after that experience," says Mr. Zurawski, president of DCCI, a Toronto-based media measurement company.

He has had no problems with the Odyssey.

Randall Kinley, who works at the University of Manitoba in Winnipeg, had a bad experience with a 1998 Ford Windstar minivan. It has been plagued by a rear door latch component that fell off, rattles and other noise and a malfunctioning control module for the ABS brake system.

Mr. Kinley also owns a 2002 Nissan Maxima. "Even though I knowingly paid a premium for this product versus a North American alternative, I would not hesitate to buy another Nissan product in the future if comfort and appearance also appealed to me," he says. "Without doubt my next vehicle will not be a Ford and will very likely not be North American."

The issue of poor quality -- both actual and perceived -- is something the three Detroit-based companies are struggling hard to repair. It has been a key priority for them for years.

And as measured by the consulting firm J.D. Power and Associates' annual survey of initial quality, they are improving, especially GM, which has seen one of its Oshawa, Ont., car assembly plants top the rankings for two consecutive years.

In the 2003 J.D. Power survey, Ford improved to the point where its new owners reported 136 problems for every 100 vehicles, compared with 143 a year earlier.

Chrysler owners reported 139 problems, against 141 a year earlier.

Both companies still trailed Toyota, BMW AG and Honda in North America, which were the only three major auto makers to better the industry average of 133 problems for every 100 vehicles.

GM slipped to 134 problems, compared with 130.

General Motors of Canada Ltd. president Michael Grimaldi says consumers may not be aware that GM has improved its quality and it's a message the auto maker needs to pound home. That thinking is behind a recently introduced program in Canada to let potential buyers take a GM vehicle home for 24 hours to test-drive it.

"We've improved quality over the last three, four years by over 35 per cent," Mr. Grimaldi says. "We believe that we have taken the quality issue off the table."

Another source North Americans turn to for automotive advice is less flattering to the Big Three, however, than J.D. Power has been.

The influential annual new car issue put out by Consumer Reports magazine lists just three of those companies' vehicles among the 22 most satisfying vehicles. That ranking is arrived at after subscribers are asked if they would buy their current vehicle again. Only the Cadillac Escalade, Chevrolet Corvette and Chevrolet Avalanche made the list.

But the 20 least satisfying vehicles list contained 14 Chrysler, Ford or GM products, including all three GM minivans, the Ford Focus and Dodge Neon compact cars and the Jeep Grand Cherokee SUV.

There wasn't a Honda or Toyota car, truck, minivan or SUV on the list of the least satisfying.

"The long-term quality still shows a tremendous gap" between the Detroit-based companies and several of their offshore competitors, says analyst John Casesa, who follows the auto industry for Merrill Lynch & Co. Inc. in New York.

A Canadian Automobile Association survey showed similar results. When the organization asked its members if they would buy the same vehicle again if they had the chance, GM ranked 10th of 13 auto makers. Ford and Chrysler tied for last. Mr. Casesa points out that when customers get angry enough to avoid one auto maker's products it means they're gone for a long time.

If consumers avoid a company that angers them for two product cycles, that's the equivalent of staying away for more than 10 years.

"If you've disappointed customers for 25 years, it's going to take a long time to win back their trust," he says.

Along with the focus on quality, however, is the need to keep the product pipeline full of new models. That's where the battle will be fought in the coming years.

Dieter Zetsche, president of DaimlerChrysler Corp., the North American operations of DaimlerChrysler, promised this week that the auto maker will introduce nine new vehicles next year and 25 over all in the next three years and will continue to focus on improving quality.

"Our next generation of cars, trucks and sport utility vehicles are the products that will shape our future," Mr. Zetsche said.

Ford is trumpeting 65 new products to come from all its divisions, which include Volvo, Jaguar and Land Rover, during the next five years. Executives from the No. 2 auto maker also promised this week that quality remains a key goal, but so does trimming vehicle output to better meet market demand.

This coming flood of new products has not escaped the notice of officials at Toyota, who are in the midst of an aggressive campaign of their own to capture 15 per cent of the world automotive market by 2010. If they are to meet that goal in North America, they will have to increase sales by 50 per cent in the next seven years, which means the relentless competition will not abate.

"Competition will be fierce in the coming years," says Kenji Tomikawa, president of Toyota Canada Inc., who adds that all the new models that will hit the Canadian market from various competitors will make hitting the 15-per-cent target in Canada a challenge.

Mr. Zetsche, whose company has been savaged by the battle in North America, refers to the market as a "jungle."

GM Canada's Mr. Grimaldi points to 60 new vehicles from his company that will arrive in dealers' lots during the next three years and says they will help reverse the decline in market share.

In addition, he says, GM will use its advantage as the low-cost auto maker in North America to remain as aggressive in the market as it has been in the past two years.

"Being the low-cost producer, we do have the ability to be much more aggressive in terms of how we promote and market our products.

"The reason we're being much more aggressive is because we have new product today that has higher quality, better overall design, more functionality, new features and we want to attract people to the showroom get them into our products."

Paul Ballew, executive director of marketing and industry analysis for GM in Detroit, is angry with the Big Three obituaries that seem to be penned almost daily.

"I do think it's important that we just don't assume that all domestics are suffering substantial share erosion and that all foreign nameplates are gaining share," Mr. Ballew told analysts and reporters on a conference call last month.

GM's share of the U.S. retail market has remained steady, he insists, and what he calls "quality of share" has actually improved.

"We have 30 per cent of the truck market consistently, we get over 30 per cent of the market above $30,000 (U.S.) on an average transaction price basis, we've gained share with college graduates, we've gained share with high-income households; however you want to cut it, in terms of quality of share, we've certainly improved our position."

Mr. Grimaldi points to the new Chevrolet Malibu mid-sized sedan as one of the cars that will help GM regain market share. Merrill Lynch's Mr. Casesa allows that it may be a great car.

But it's in a segment that is the most competitive in North America and one where Big Three domination has been destroyed by Toyota's Camry and Honda's Accord.

"To be a money maker, it's going to have to break through the clutter and be distinctive," Mr. Casesa warns. He sees compelling evidence that executives of the Big Three are keenly aware of the market share problem and are trying to deal with it.

"After about 40 years of financially driven management, product and manufacturing people once again are powerful in Detroit."

He points to Cadillac, where a distinctive new design theme permeates all the luxury division's new vehicles and has combined with an edgy marketing campaign to boost sales. The key, however, is having the patience to hammer home the theme until it sticks in consumers' minds the way Mercedes has convinced North Americans that its three-pointed star stands for well-engineered vehicles.

If GM does that and makes a success of it, then transfers those successes to its other divisions, it could reverse the trend, he says.

Big Three spinning out

Over the past 24 months, the North American market shares for Ford, General Motors and the Chrysler unit of DaimlerChrysler have dropped, as the firms have shown an inability to hold their own against non-Big Three rivals.

Canada

2003

GM: 27.9%

Ford: 15.7%

Chrysler: 13.4%

Non-Big 3: 43%

2001

GM: 29.5%

Ford: 16.2%

Chrysler: 15.5%

Non-Big 3: 38.9%

United States

2003

GM: 27.7%

Ford: 19.5%

Chrysler: 12.8%

Non-Big 3: 40%

2001

GM: 29.9%

Ford: 21.7%

Chrysler: 13.4%

Non-Big 3: 35%

Note: Non-big 3 refers to Asian and European car makers

SOURCE: COMPANY REPORTS

Driving for dollars

$1,000 U.S. invested at Oct. 1, 2001, and what it is worth today. Dividends reinvested.

GM: $1,049

Ford: $1,011

Daimler-Chrysler: $1,121

Toyota: $1,082

Honda: $1,157

U.S. 90-day T-bills: $1,031

SOURCE: BLOOMBERG FINANCIAL SERVICES; CBID MARKETS INC.