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(CNN Business) —  

Auto sales are close to a record high in the United States, yet the American auto industry is in the midst of a massive upheaval.

Automakers are reckoning with an unsustainable status quo: They have too many factories that make cars Americans don’t want anymore. That’s why GM (GM) is closing four US plants and Ford (F) is in the process of a major reorganization.

American auto plants have a capacity to make 3 million more cars, SUVs and trucks than they can sell.

Auto plant building spree

One major reason for the excess capacity is foreign automakers’ three-decades-long building spree of new auto plants.

Foreign automakers operate 19 auto assembly plants in the United States, and that number continues to grow. Volvo opened a plant earlier this year. Toyota and Mazda are jointly building a new plant in Alabama. BMW is in the process of expanding its plant in South Carolina, already its largest factory in the world, and it is considering adding an engine plant in the United States, too.

The plants reduce foreign automakers’ shipping costs and delivery times to American customers. They also lower the risk of fluctuating foreign exchange rates. And they helped double foreign automakers’ share of the American market over the past 30 years – more than half of the vehicles sold in the United States are now made by foreign automakers.

The market share gain for those foreign brands has come at the expense of American automakers. In 1988, when Toyota opened its Kentucky plant that started the building boom, GM, Ford and Chrysler controlled 74% of the US market. Today, those three account for only 44% of the market.

Half of GM’s 12 assembly lines are operating below 80% capacity, generally the break-even point for a plant’s profitability.

“Everyone has some unused capacity,” said Kristin Dziczek, vice president of industry, labor and economics at the Center for Auto Research. “The biggest chunk of it is at GM.”

SUVs are suddenly popular

Consumers’ changing tastes have also contributed to the supply glut.

The relatively sudden shift in car buyers’ preferences from traditional sedans to SUVs and trucks has left some of the plants building cars with way more capacity than they need to satisfy demand. Some SUV plants are actually straining for capacity.

Some auto plants have changed from cars to SUVs or trucks. Ford took a plant that had made the Ford Focus and put it to use building the new Ranger pickup. Ford is also is cutting 1,150 jobs at some underutilized plants and shifting most of the workers to plants building SUVs. Chrysler is reportedly planning to take a closed engine plant in Detroit and reopen it to build the Jeep Cherokee.

But shifting a plant from cars to trucks is an expensive process. The growing popularity of SUVs isn’t enough to fill all of the unused capacity at car-making plants. And it will take some time for electric cars and self-driving vehicles to pick up the slack.

That’s why GM is planning to close plants and Ford is cutting shifts and jobs at one of its few remaining American plants that makes cars.

Auto sales are slipping

Auto sales had been rising in essentially a straight line from 2010 through 2016, lifting sales by more than two-thirds. But Americans aren’t buying quite as many vehicles as they had been.

US auto sales fell 5% last year. Sales through September of this year were marginally higher, but even if they eek out a narrow gain this year, it won’t get back to 2016’s record.

“Everyone was growing,” said Jeff Schuster, analyst with LMC Automotive. “You were refilling the plant. Back to 2016 you were pretty much fully utilized. Now you’ve pulled back from that and you start to squeeze a little more. You add in the acceleration of the shift to crossovers and SUVs, you end up with things like GM.”

If the economy starts to slow, those sales are likely to fall even further.

Imports

Another issue is vehicle imports to the United States.

President Trump and some lawmakers in Congress were quick to blame imports from Europe and Asia and American automakers’ plants in Mexico for the problem with GM closing US plants.

Imports are a source of competition for US plants – but not its largest source. The majority of cars sold in the United States are made in the United States.

Foreign automakers built a combined 5.2 million vehicles in the United States last year. That’s about a million more vehicles than came into the country from Mexican and Canadian plants combined – and nearly twice as many vehicles as were imported from Asia to the US last year. That’s more than four times as many a