Filed under: Autoline on Autoblog
Autoline on Autoblog with John McElroy
What is an "American" Car?
I get a lot of people asking me to define exactly what is an American car? Is it a vehicle made by one of the Detroit automakers, yet assembled in Canada, Mexico, or some other country? Or is it a vehicle made by a Japanese, European, or Korean company with assembly plants in America? Or is it something in between?
In other words, is a Toyota Camry built in Kentucky an American car? Or is a Ford Fusion that's made in Mexico an import?
John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.
My definition of an "American car" is a vehicle which was conceived, designed, engineered, developed and manufactured in America. It might have a Big Three logo on it, it might have a Japanese logo on it. As long as it meets that criteria, it doesn't matter to me.
But I also allow for some nuance in my definition. As far as I'm concerned, product creation is what really counts. That's what generates the greatest value for the economy. If I had to choose, I'd rather see a vehicle created here than assembled here. To their credit Toyota, Honda and Nissan are doing some of their product creation in the US, mostly with some of their truck products. Hyundai's getting there. The Europeans are nowhere to be seen.
A quick rule of thumb: where was the physical crash testing done? In the US, or overseas? That will immediately tell you where most of the development was performed.
Assembly plants create a lot of factory jobs, but they don't create as much value as product creation does. This is especially true if the dies, fixtures, robots and tooling needed to make a car were imported. There just isn't that much economic value generated by pulling parts out of a bin and bolting them onto a car as it comes down the line. The highest value comes from designing, engineering and developing those parts in the first place.
If foreign automakers create products in the US, I'm not bothered at all that they repatriate the profits of those vehicles back to Japan or another country. It's still worth it because roughly 90% of all the value created by those products will stay in the US. Conversely, if that vehicle was mostly created in Japan or Korea or where ever, I don't consider it "American" even if it is assembled in the USA.
The same goes for a GM, Ford or Chrysler product that's assembled in Canada or Mexico. As long as the product creation took place in the US, the overwhelming amount of value generated by it will stay in the US. So for me, even if a vehicle like that is assembled north or south of the border, it's still American.
Autoline Detroit
Airs every Sunday at 10:30AM on Detroit Public Television.
Autoline Detroit Podcast
Click here to subscribe in iTunes
Now follow Autoline on Twitter for ongoing updates every day!
Autoline Daily
I get a lot of people asking me to define exactly what is an American car? Is it a vehicle made by one of the Detroit automakers, yet assembled in Canada, Mexico, or some other country? Or is it a vehicle made by a Japanese, European, or Korean company with assembly plants in America? Or is it something in between?In other words, is a Toyota Camry built in Kentucky an American car? Or is a Ford Fusion that's made in Mexico an import?
John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.
My definition of an "American car" is a vehicle which was conceived, designed, engineered, developed and manufactured in America. It might have a Big Three logo on it, it might have a Japanese logo on it. As long as it meets that criteria, it doesn't matter to me.
"...product creation is what really counts."
But I also allow for some nuance in my definition. As far as I'm concerned, product creation is what really counts. That's what generates the greatest value for the economy. If I had to choose, I'd rather see a vehicle created here than assembled here. To their credit Toyota, Honda and Nissan are doing some of their product creation in the US, mostly with some of their truck products. Hyundai's getting there. The Europeans are nowhere to be seen.
A quick rule of thumb: where was the physical crash testing done? In the US, or overseas? That will immediately tell you where most of the development was performed.
"Assembly plants create a lot of factory jobs, but they don't create as much value as product creation does."
Assembly plants create a lot of factory jobs, but they don't create as much value as product creation does. This is especially true if the dies, fixtures, robots and tooling needed to make a car were imported. There just isn't that much economic value generated by pulling parts out of a bin and bolting them onto a car as it comes down the line. The highest value comes from designing, engineering and developing those parts in the first place.
If foreign automakers create products in the US, I'm not bothered at all that they repatriate the profits of those vehicles back to Japan or another country. It's still worth it because roughly 90% of all the value created by those products will stay in the US. Conversely, if that vehicle was mostly created in Japan or Korea or where ever, I don't consider it "American" even if it is assembled in the USA.
The same goes for a GM, Ford or Chrysler product that's assembled in Canada or Mexico. As long as the product creation took place in the US, the overwhelming amount of value generated by it will stay in the US. So for me, even if a vehicle like that is assembled north or south of the border, it's still American.
Autoline Detroit
Airs every Sunday at 10:30AM on Detroit Public Television.
Autoline Detroit Podcast
Click here to subscribe in iTunes
Now follow Autoline on Twitter for ongoing updates every day!
Autoline Daily
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Reader Comments (Page 1 of 3)
MikeW 7:06PM (1/08/2009)
Canyonero!
Reply
twitchykun 9:49AM (1/09/2009)
You sir, deserve a medal.
Jeff 7:13PM (1/08/2009)
I would just like to point out that Mexico and Canada are also part of America, so technically a vehicle made in either of those two countries is inherently American.
Reply
maestro_mario 7:26PM (1/08/2009)
I agree.
A product designed in US and assembled in america. But it's also a design philosophy: A simple, roomy, easy to maintain affordable vehicule.
John 6:47AM (1/09/2009)
I would strongly disagree Jeff.
Canada and Mexico are part of North America. Not America.
North America is a continent. America is short for United States of America, and citizens of USA are Americans.
As a proud Canadian I never think of myself as American, only as North American. There is a huge difference and we are very different people.
Having said that however, I am very fond of my American neighbors, but will always prefer to visit them, rather than be them.
Jeff 10:17PM (1/09/2009)
America is not the same as the United States, even though it is misused by virtually everybody in the U.S. America is truly North and South America(check dictionary), so If you were to say that your product was "Made in America", this would be true even if it was made in Brazil. Think of the legal ramifications... you can make something anywhere in north or south America and claim it was "made in America" and you would not be lying, only potentially taking advantage of most peoples ignorance to geography and/or ambiguity in terminology.
John - I understand your desire to differentiate yourself from the U.S., I wish I could do the same but I live in Florida and must deal with the ignorance daily. As much as you don't consider yourself American in the modern sense as it relates to being from the United States, you are still inherently American in the original true sense of the word because you are from Canada, which is a part of North America, which is a continent of the Americas.
Level 7:18PM (1/08/2009)
An American Car is a car made by an American Entity which profits stay in the U.S.
Reply
Chris 7:20PM (1/08/2009)
Like a Chevy Aveo? LOL
chconline 7:34PM (1/08/2009)
The Aveo is a rebadged Daewoon; technically it's Korean.
chconline 7:34PM (1/08/2009)
Oops I meant Daewoo. Sorry for the typo.
snp 7:40PM (1/08/2009)
Amen to that, in addition it should be engineered in the USA too. That way we keep the smart people in this country. Not outsource the intelligence somewhere else so smart people gather around there.
Then on top of that, profits should stay in the USA. The rest of it can be from anywhere else.
HEY that's just the opposite of what they do in japan! Engineer AND designed in japan (so smart americans fly out to japan and live there) then leave us the garbage work of slapping parts together at low wages and a promise of lifetime employment and 401k. Even worse with Europeans/Koreans - do everything abroad except sales/transport. So americans can only make money selling cars. That way, we as a country can earn a salary off the commissions from buying the very products we sell. I think there was an episode like that in "Married with Children" - Al's analogy was coined as "skyrocketing us to the poor house".
Why should we give americans the 75-150k salary jobs when we can give them to the Germans, Swedish, British, Japanese, Koreans, and now the Chinese are in it too. (GM's buick). I think manufacturing for the detroit 3 should be minimally placed in detroit. If I were a prospective engineer, I wouldnt want to live in the poor and low intellect neighborhoods of detroit. Can you imagine raising your kid in detroit? The high unemployment, rampant crime, poor student results.
Chris 8:02PM (1/08/2009)
cnconline, it was rather obvious sarcasm.
dantzig 9:53AM (1/09/2009)
ceo's get salaries. shareholders (read: owners of the company) get profits. if you want the profit to stay in the US, buy toyota stock. nyse symbol TM. that simple.
i mean come on, seriously ... how do you know who owns GM stock? people all over the world (even people in Japan ... or China!) can buy it just as easily as americans can.
Level 10:49PM (1/08/2009)
It's not as simple as buying stock my friend. People that buy stock(shares) get a small fraction on their investment towards the actual company. You are actually supporting the infostructure by giving them a positive cash flow which leads to additional capital to invest in new projects.
Oil is the perfect example of where the profits go. You can buy as many stocks as you want from an oil company but the company and country that will benefit the most is the country that retains the entity which is making the profits of the goods it is selling. Take Dubai for example.
Chris 7:20PM (1/08/2009)
Outstanding, this is what I've always said to coworkers and friends who rip on me for my 2003 Accord Coupe 6-speed. It's nearly 100% Ohio and isn't even sold in Japan.
Reply
snp 7:44PM (1/08/2009)
Except for the thousands of dollars in profits.
Chris 7:59PM (1/08/2009)
Oh sorry, I forgot that Rick Wagoner needed another vacation home and more than $14 million a year.
Who the hell cares what CEO gets the profit when my car involved hundreds of millions of dollars of development work in the US?
I work for a German tier 1 supplier and our business in the US is almost exclusively US-based companies...are you angry that the profits from the connecting rods and pistons and rings in half of the GM and Chrysler vehicles go back to the fatherland? Or is that okay because their eyes are round? I dont get the resentment towards Japanese vehicles, no one cares about the Mercedes or several of the Big 2.5 cars from overseas that have zero development work done in this country.
jpm100 8:19PM (1/08/2009)
Assembled is not Made.
Not all of a given model isn't even assembled here.
And I've seen what is effectively a reprint of a press released published like it was news quoting high content numbers. How did they assess that content? Weight, Cost, Part Numbers? Is a fully assembled door from Japan one part and the 4 bolts to attach it to the vehicle bought at the local fastener supplier 4 parts?
All I know is for roughly the same market share they employ a small fraction of the employees the US auto industry employs doing the same thing. Its because the Japanese simply do less here.
Then all the profit and advanced jobs are abroad.
Chris 8:26PM (1/08/2009)
jpm100, do some research before you speak. My car was designed, engineered and built in the United States. I've been to the plant where it was built and spoken to engineers there, they seemed pretty American to me. It has 90% US parts content, the only major thing from Japan is the transmission because Honda makes all of their manual transmissions there. If it was an automatic it would be nearly 100%.
happy_penguin 8:38PM (1/08/2009)
With a content of 90%, by definition your Honda qualifies as "domestic". That still doesn't make it American to me and I probably wouldn't buy one but I don't have many complaints against Honda. They make fine products and I'm glad they're providing jobs to Americans.