Lets use GM & Toyota as examples:
General Motors was the biggest car company in the world 30-40 years ago. They had many, many employees, many of whom r still drawing retirement pay & health benefits.
I do not think Toyota was even the biggest in Japan at the time, & was barely a blip on the Big Three is radar. They have very few employees from back then still drawing pay & benefits.
So part of the problem is that the US automakers still have the liabilities of a large company, when they've got ..uh, well, the assets of a less large company. The Japanese automakers r in the enviable position of.the reverse.
Also, the Japanese automakers do not have the inflated wages & benefits of current employees.they pay pretty well for low-skilled & unskilled labor. But not like GM & Ford & Chrysler do at their union plants. (The UAW is undermining their own future, & the future of all unions, & therefore of all workers.)
Also, for decades, the big three figured they did not NEED to improve their cars. Quality did not matter, because people would buy any shit they were shovelling. Japanese cars still had a stigma of cheapness, & did not actually GET better than American cars until the late 70s & early 80s. By the time the Japanese had gotten their shit together, the big three is shit was in a shambles. They had spent 20 years sitting on their asses improving nothing. It has taken them 20 years to get back to being competetive on quality.
That is not to say they have not ALWAYS had a few models that were as good as anything anyone else was offering, or unlike anything anyone else was offering. But you're right, for the most part, they didn't. And they still (particularly Chrysler) have a lot of models that lag behind everything else in their classes.