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There is a much more in-depth answer, I've been following the American auto-industry in-depth as a hobbyist since long before I could drive, but it cashes out in a sentence to: they never made a mid-size family sedan that could beat out the Camry and the Accord. The story of Detroit goes back to how the big companies formed by buying out other brands, the antiquated dealership laws that leave them beholden to local middleman businesses with serious lobbying power, and to the decline and resulting deal with the devil that saddled them with a raft of poor choices after the bailout.
The Detroit Big 3 occasionally made great cars, but couldn't put together a consistent record. I've been reading my dad's car magazines since I was maybe 12, and I've read more comparison tests than I could possibly remember. American cars occasionally won against Japanese and German competition, but they also occasionally finished last. The class standards, the Camry and Accord and 3-Series, tended to avoid last place, even if they didn't win. Detroit products were hit or miss. Or if they got a hit, like the PT Cruiser (people LOVED that thing when it came out and there were waiting lists to buy it), they would let it go entirely too long without real updates. As a result, even winning products when released would ultimately drag down and get bad reputations. Then they'd get discontinued, removing any brand loyalty, a shocking number of people keep buying the same car every time theirs breaks down and they couldn't do that with the Big 3 in too many cases.
The knock on effect of this was that Detroit automakers were constantly reworking their model line-up. They were eliminating cars that had acquired bad reputations, and replacing them with new nameplates. The car that a Cadillac dealer wanted to stack against a Three Series went from the Deville to the DTS to the CTS to the ATS to the CT4. In that whole time, the Three Series stayed the Three Series (even if I have some complaints about the direction it is going). The car Ford wanted to run up against the Camry was the Taurus, then the Taurus was canceled and replaced with the Fusion (globally Mondeo), then the Taurus was brought back as a bigger car to replace the Five Hundred, then both were cancelled again. The Camaro never recovered from its hiatus. That kind of lineup churn reduces consumer faith.
That lead Detroit into the bailout era, which left the corporations as permanent government pawns. The gov forced GM to axe Pontiac and Hummer. Pontiac was probably a good idea, Hummer definitely wasn't, that was Obama Admin ideological meddling Hummer would be a great brand to have around today we'd have an H4 crossover getting 30mpg and the H3 would be a huge seller. This weakened the ability to negotiate with two important constituencies: the UAW and the Dealerships. Both lobby for bad marketing choices, bad corporate choices, both have the ears of their representatives in congress.
In the long run, Detroit was stuck with a lot of poor choices for badge engineering reasons because of UAW and Dealership lobbying efforts. Half the brands they run shouldn't exist; but the dealership structure made it difficult or impossible to shutter Lincoln, Buick, GMC, etc. Pontiac and Saturn and Hummer and Mercury could only be killed safely because of the bailout. Zombie brands selling badge engineered junk sucked the life out of real efforts at running a modern car company.
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