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How To Buy an American Car

Your Choice Starts With Your Definition

People have lots of different requirements and desires for their cars. They want them to be sporty, sexy or fuel-efficient. And many people want their cars to be one more thing: American.

But in a world of global supply chains, buying an “American” car can be a complicated business. Increasingly, foreign carmakers such as BMW, Honda, Hyundai, Mercedes-Benz and Toyota build some of their vehicles here. Domestic carmakers, meanwhile, assemble popular models in other countries and import them to the U.S. A federal law passed in 1992, the American Automobile Labeling Act (AALA), is supposed to help shoppers know more about where their cars’ parts were made and where the vehicles were assembled. The labeling that the law requires has its virtues, but some provisions make it more confusing than helpful.

That’s a shame. Seventy percent of more than 2,000 people responding to a recent survey by Harris Interactive said it’s important or very important to “buy American” when it comes to their automobiles. To be considered an American car:

  • 75 percent said it has to be manufactured within the U.S.
  • 52 percent said it has to be made by a U.S. company.
  • 47 percent said it needs to be made from parts produced in the U.S.
  • 25 percent said it must be designed by an American.

Three other statements in the survey get at the desire of U.S. car buyers to use their auto purchases to support the nation’s economy: 90 percent said they want to keep jobs in America. Eighty-seven percent said it’s important or very important to buy American-made cars to “support American companies.” And 76 percent said they buy American because of “patriotism.”

Hard To Know if You’re “Buying American”
What is an American car? That’s a hard question to answer. “American-ness” is often in the eye of the car shopper — and the carmaker.

Toyota has touted its Avalon as an “All-American” car. It was designed, engineered and manufactured in the United States, and 70 percent of the content in the 2015 Toyota Avalon is domestic, according to the carmaker. Many car buyers, however, reject the idea that a company based in Toyota City, Japan, could make “American” cars.

Ford Motor Co. was perceived as being the “most American” company in the Harris survey. But several of its cars, including the Focus and Fusion, have less than 50 percent domestic content. The 2015 Ford Fiesta, for example, was built in Mexico, with 15 percent of its parts coming from the U.S. and Canada and 60 percent from Mexico. Its engine could come from Brazil or Germany. The transmissions are even more international, hailing from Brazil, France, the U.K. or Mexico. Because it’s a Ford product, the Fiesta might fit some definitions of an American car, but it wouldn’t make the grade for people who demand U.S. parts and manufacture.

The 2015 Chevrolet Camaro is a product of Detroit-based General Motors and sports an image that’s all-American. But it’s built in Canada.

And then there’s Jeep, another dyed-in-the-wool American brand. The Wrangler is built in the U.S. with more than 60 percent domestic parts. A car buyer in 2013 told Edmunds he’d specifically ordered a 2013 Jeep Wrangler not only because it fit his needs, but because it is “sold by a U.S. manufacturer.” Then he added, “Although it’s actually a European company, isn’t it?”

He’s right: Jeep is part of Fiat Chrysler Automobiles (FCA). But would the fact that FCA is registered in the Netherlands with corporate offices in London prompt a star-spangled off-roader to cross a Jeep off her list?

Looking at the Label

On its website, the National Highway Traffic Safety Administration publishes the American Automobile Labeling Act (AALA) lists for model years dating back to 2007. They’re organized by percentage of domestic content and alphabetically by manufacturer.

Finding a car that’s born and bred in the United States was supposed to be made easier by the AALA, which requires carmakers to provide parts sourcing and manufacturing information to car buyers.

But the AALA list is puzzling right off the bat. Under its provisions, for example, the term “American” covers both U.S. and Canadian content. That’s a concession Detroit-based carmakers won when the law was being drafted, says Frank DuBois, an expert in global supply chain management and an associate professor at American University’s Kogod School of Business.

“You had a lot of movement between the U.S. and Canadian borders, and automakers argued hard that segregating this out, with parts and subassemblies moving around” would be an administrative nightmare, DuBois says. “So the law allows U.S./Canadian labeling.”

To comply with AALA, the window sticker of a new car must have a section that shows:

  • The percentage of U.S./Canadian parts content for the car line.
  • The names of any countries other than the U.S. and Canada that individually contribute 15 percent or more of the equipment content, and the percentage of content for each such country, to a maximum of two countries.
  • The final assembly point by city, state (where appropriate) and country.
  • The engine’s country of origin.
  • The transmission’s country of origin.
  • A statement that explains that parts content does not include final assembly (except the engine and transmission), distribution or other non-parts costs.

Problems With the AALA

DuBois, whose background includes a stint as a Volkswagen mechanic, is critical of the AALA. He developed the Kogod Made in America Auto Index as a more comprehensive way for consumers to judge a car’s American pedigree.

While DuBois incorporates information from the AALA into the Kogod index, he says that the law has some significant flaws that reduce its usefulness for American-car shoppers.

For example, the law lets carmakers overstate the “American-ness” of their vehicles. “If you have 70 percent U.S. and Canadian content, you can round that up to 100 percent,” for reporting purposes under the law, he says.

The only way to know for sure where the car was assembled is to check the first letter or digit on the vehicle identification number (VIN). Cars assembled in the U.S. start with a 1, 4 or 5. Cars assembled in Japan have VINs beginning with a J. Canadian-assembled cars begin with a 2. Cars assembled in England begin with an S. German-assembled cars begin with a W. Korea is a K and Mexico is a 3.

Some carmakers separate variants within a car line in their AALA reports. Toyota separately lists its 2015 Avalon Hybrid, for example, which is not as all-American as its much-publicized gasoline-engine cousin. The conventional Avalon is U.S.-built, with 70 percent U.S. and Canadian content. The Avalon Hybrid, also built in the U.S., has just 40 percent U.S./Canadian content.

A Different Way To Keep Score

The AALA’s list is a pure parts-and-assembly report. It doesn’t look at broader economic impacts related to the car, DuBois says. He believes that should be a factor in determining how American a car is. The AALA doesn’t consider where a car’s research and development took place, where a carmaker made capital investments or where the profits go. For a more detailed look at such questions, read “Foreign Cars Made in America: Where Does the Money Go?”

The Kogod Made in America Auto Index does account for such factors, including where the carmaker is headquartered, where the car is assembled, where research and development are done and the location of production for the engine, transmission, body, interior, chassis and electrical components. The result is a different ranking of which cars are the most “American.”

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SOURCE: http://www.edmunds.com/car-buying/how-to-buy-an-american-car.html

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