The Top "American Made" Cars Are... Japanese
Am I alone in finding it odd that the two top performers in the Cars.com "American Made Index" are, in fact, Japanese? The index ranks vehicles based on where they're built, their popularity, and their percentage (by cost) of parts made in the U.S. The two "Most American" cars are the Toyota Camry (assembled in Georgetown, Ky., and Lafayette, Ind.) and the Honda Accord (made in Marysville, Ohio, and Lincoln, Ala.).
It's really just a sign of the times: This year, foreign automakers will produce more cars in the U.S. than the Big Three will. It means that cars are experiencing a bit of an identity crisis: The "American" ones aren't necessarily all that American. Meanwhile, foreign automakers (busily colonizing the South) are providing plentiful U.S. jobs. VW's Chattanooga, Tennessee car plant, to open later this year, will employ 2,000.
It's not altruism that, for instance, led Honda, Hyundai and Mercedes to establish car plants in Alabama. It's simply more cost effective for them to build cars for the U.S. market there. "They're not opening up plants here just for the positive press," said David Thomas, senior editor at Cars.com. He added that American buyers have repeatedly expressed their preference for the Camry and Accord, "and it just so happens that today those cars are put together by more and more Americans."
The trend to what are known as "transplants" began in the early 1980s as lawmakers started talking about mandating U.S. content. Volkswagen was a pioneer, setting up shop in Pennsylvania in 1978 (it closed 10 years later amid labor unrest). Honda began making Accords in Ohio in 1982, and Nissan started producing trucks in 1983 at its current Smyrna plant in Tennessee. Toyota, Mazda and Mitsubishi came soon after.
The motivation then was political, but the protectionist threat had faded by the 1990s. Soon there were other advantages. Producing cars close to the markets that would consume them offered dramatic savings in transportation costs as oil prices rose, labor costs were relatively low in the U.S. (especially in "right to work" Southern states), the currency exchange and NAFTA rules made it favorable -- and then there were those lovely tax breaks.
The states' hunger for auto plants was palpable. BMW as lured to South Carolina in 1992 with a tax package worth $150 million, and Mercedes got $258 million from Alabama the following year. As I described in an earlier story, Chattanooga was so eager for Volkswagen's plant that it forgave taxes for 30 years, a deal worth a whopping $511 million.
A whopping five out of the 10 "American Made" champs are Japanese, including two Hondas and three Toyotas. No automaker is more American that General Motors (after all, the taxpayers own the company, and it's "The Heartbeat of America"). But only one GM vehicle, the Chevrolet Malibu (built in Kansas City, Kansas) makes the list.
U.S. content laws never made it out of the gate, but flag-waving, protectionist legislators did succeed in passing the 1994 American Automobile Labeling Act (which requires window display of the percentage of parts made in the U.S and Canada). The law was intended to allow consumers to display their patriotism and buy American, but the fact that Hondas and Toyotas have higher percentages than star-spangled brands may just be creating confusion among consumers. The Accord might not pass muster with the guys down at the American Legion hall, but in fact buying one supports U.S. jobs.
"As domestic automakers strive to be truly global in scope, they're increasingly looking to save costs across the board," said Thomas. "Sourcing parts globally lowers the amount of domestic content, which is why you see so many newer designs from the domestics not making the list or falling off. They're doing this to be more competitive, and in many cases, it is working."
The same process that made Japanese, Korean and German cars more American, also made U.S. cars less so. In order to compete, particularly in the compact market, Ford, GM and Chrysler had to source lower-priced parts, and in some cases whole cars, from Asia. GM's latest design studio is in Korea, the source of its new high-stakes Aveo small car.
The Ford F-150 topped the list two years ago, but it doesn't place now. This red, white and blue truck, a perennial bestseller, is still made in the U.S., but it now has domestic content of 55 percent, down from 80 percent when it was at the head of the class. The Dodge Ram 1500 (made in Warren, Michigan) makes the list at number seven, but its single-cab version, which is assembled in Mexico, doesn't. Also dropping off the list are GM full-sized pickups Silverado and Sierra. Both now have 65 percent domestic content.
"Most cars built in the U.S.," says Patrick Olsen, editor of Cars.com, "are assembled using at least some parts that come from elsewhere."
The Big Three have also started referencing "North American" content, because that includes both Mexico (the Ford Fusion) and Canada (the Chevy Camaro).
Chrysler didn't make the list in 2009, but it's back in 2010 with not only the Dodge Ram 1500 but the Jeep Wranger (Toledo, Ohio) at number nine. Chrysler's American content probably reflects its status in limbo between the end of one European deal (its partnership with Daimler) and the start of another (with Fiat). In 2011, as foreign-sourced content starts infiltrating even the all-American Jeep, maybe Chrysler won't be waving the flag quite as much.
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Photo: American Honda