How to Buy an American Car

 

 How can I make sure the next car I buy has the maximum possible percentage of U.S. “content” (parts, labor, and manufacturing overhead)?

There are two ready sources of information.[i] 

The American Automobile Labeling Act

The first is the American Automobile Labeling Act (AALA).[ii] Since 1994, regulations under AALA have required that each automobile manufactured for initial sale in the U.S. bear a label disclosing where the car was assembled, the percentage of equipment that originated in the U.S. and Canada, and the country of origin of the engine and transmission.

The AALA is a vestige of the U.S.-Canadian Automobile Pact of 1965.  Due to its origins under the Pact, the label states the combined U.S. and Canadian content, without separating the two.  The AALA has some other limitations, such as listing a percentage of parts content not including the content added in the final assembly – so, the percentage figure understates the U.S. content of a car assembled in the U.S., and overstates the U.S. content of a car assembled in Mexico or some other country. 

However, it has the advantage of stating the location of the car’s final assembly, where the car’s engine and transmission are manufactured, and up to two countries responsible for fifteen percent or more of the equipment content of the car.  In short, there is a lot of information to be derived from these labels.  And, you don’t have to go out to the dealer to see them; the National Highway Traffic Safety Administration publishes the information annually.

To obtain the NHTSA annual reports, go HERE.

 

The Kogod Made in America Auto Index

There is another listing that, in some ways, is more informative than the AALA list: American University's Kogod School of Business publishes a list developed by Associate Professor Frank DuBois, the “Kogod Made in America Auto Index.”  Intended to provide a better read on the car’s total effect on the U.S. economy, the Index is based on the AALA reports, but includes some additional critiera – for example, where the profits accrue.[iii]  The Index scores each car line, more than three hundred at this writing, with a possible maximum score of 100, on criteria including:

  • where the manufacturer’s headquarters is located;
  • where most research and development (R&D) occurs;
  • where assembly occurs;
  • where the engine and transmission come from; and
  • the AALA score.

To visit the Kogod Made in America Auto Index, go HERE.

 

Where does that leave us?

A couple of points jump out of both the AALA and the Kogod lists:

  • For all the talk about how hard it is to tell where a car is made, there is a long list of cars that are made entirely, or almost entirely, in Japan, Korea, Germany, or some other country – you can be certain that when you buy one of these cars, you are helping the other country’s economy and workers, and not the American economy and workers. 
  • There are many cars made by the “Detroit Three” that have very low U.S. content, and should be avoided for the same reasons.
  • A number of cars are made in the U.S. by Japanese companies with rather high U.S. content scores, that may provide a second-best, but suitable option. 
  • There is a wide variety of high-quality cars with high scores, with profits accruing to U.S. companies, available to fund further R&D and other essential activities. 

 So, in order of preference --

  • We should first choose a car with a high score that is made by one of the “Detroit Three,” starting with Ford and GM, and then Chrysler, which, although at this writing a subsidiary of the Italian company Fiat, has substantial U.S. ownership.  The companies’ trade association, the American Automotive Policy Council (AAPC) states that “These three companies are the heart of the industrial base of the United States and an engine of the American industrial economy.” [iv] (Unfortunately, they are moving toward more foreign sourcing and production – but we will help them change that!) 
  • Next in preference is a car assembled in one of the U.S. plants operated by a foreign auto company, if its U.S. content rating is high enough. 
  • We should avoid buying cars, whether made by U.S.-headquartered or foreign companies, with low U.S. content – it won’t take long for them to realize that, if they want to sell cars into the U.S. market, they will have to build them here.
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