And thanks to high gas prices, it's starting to work.
Gas prices are on a downward trend, but prices are still around $4 a gallon. So more and more carbuyers are opting for cars that get 40 miles per gallon, not 14.
By refocusing on small cars and de-emphasizing the gas-guzzlers, American automakers are preserving jobs and positioning themselves to prosper
American automakers are beginning to think smaller.
The New York Times reports, almost one in four vehicles sold in the US in April was a compact or subcompact car. A decade ago, those cars made up just 1 in 8 of cars sold.
And of those small cars sold in april, about 27 percent were American models, up from 20 percent a year ago.
As gas prices have soared, consumers have shown a preference for smaller, more fuel efficient vehicles.
And unlike previous generations of american-made cars, some new models, from GM and Ford in particular, are both fuel-conscious and loaded with technology and attractive features.
That includes heated leather seats, internet access, and even voice-activated entertainment systems.
Even Chrysler, the smallest of the Detroit car companies, has begun to make changes in a similar direction, as it expands its relationship with the italian company, Fiat.
GM and Ford have without a doubt been leading the way in trying to compete with their Japanese and Korean rivals. And in the process, they're also preserving American jobs.
Ford has recently converted a former SUV plant to build small cars, while GM is preparing to make the first subcompact model it has ever produced in the US.
These companies may still earn far bigger profits on trucks and SUVs but small cars are now commanding better prices in the showroom.
Still, foreign cars continue to give Detroit stiff competition. Hyundai has introduced well-received models, and Honda recently started selling a new version of the Civic, the perennial market leader.
But instead of a few Japanese models grabbing the bulk of the sales, the compact-car segment is now a wide open field.