@ THE MOTLEY FOOL
The phrase "Made in America" used to mean something special. It stood for a product that was forged in the U.S., and it symbolized the hard work and patriotism of the American worker that went into manufacturing that product. Furthermore, purchasing goods produced domestically represents a way of supporting American businesses and entrepreneurs.
But, "Made in America" doesn't carry the same weight as it once did. Nowadays, businesses from many sectors are forced to look outside our borders for parts and labor in order to reduce their costs and remain price competitive with their peers overseas.
Even in instances where products are being manufactured in the U.S., an increasing number of parts being used to manufacture those goods comes from outside the United States.
"Made in America" is hardly recognizable in this industry
Perhaps no industry has made this shift appear more transparent than the auto industry.
According to the ninth annual Cars.com American-Made Index report, the list of vehicles that qualify for ranking is dwindling dramatically. In order to qualify, 75% or more of a vehicles parts need to be manufactured in the U.S., the vehicle needs to be assembled in the U.S., and the final component ranks total domestic sales of the vehicle.
Based on those criteria, just 10 vehicles qualified in 2014. This is down from 14 vehicles in 2013, 20 in 2012, and 30 in 2011, and it speaks to the cost pressures that some of the biggest names in the auto industry are currently facing. In other words, automakers in increasing numbers are turning to foreign parts to cut manufacturing costs.
While Cars.com's annual report isn't a perfect measure of how "American" a car is, because it fails to factor in the emotional ties of a brand to American culture and the history behind an auto manufacturer or brand, it does offer insight into what vehicles are clearly helping American businesses. It could well offer clues as to what vehicles U.S. consumers might continue to buy.
Now, if you were to think of the most "American-Made" cars, there's a good chance that the Chevrolet Corvette would come to mind.
2014 Chevrolet Corvette Stingray, Source: General Motors.
It's been in production since the summer of 1953, and since that time close to 1.6 million units have rolled off General Motors' (NYSE: GM ) assembly lines. Furthermore, with the exception of 1983, when only 44 prototypes were built and not sold to the public, it's been in production for 61 straight years.
5 foreign vehicles that are more "American" than the CorvetteArguably, the Corvette is among the most deeply rooted cars in American culture. But, according to Cars.com there are five foreign vehicles that are even more "American" than the Corvette, which finished seventh in the rankings.
These five vehicles include a landslide showing from Toyota (NYSE: TM ) with the Camry, Sienna, Tundra, and Avalon occupying the second, fourth, fifth, and sixth spots, respectively, on Cars.com's list, with Honda (NYSE: HMC ) claiming the third spot with the Odyssey.
I'll let the fact that two minivans are considered more American than the Corvette sink in for a moment, because I know I had to recover after reading it for the first time!
As noted by Cars.com, General Motors actually had at least one of its three-row crossover SUVs (the Buick Enclave, Chevrolet Traverse, and GMC Acadia) take a top-10 spot over the previous three years, but an uptick in foreign parts content removed them from qualifying this year.
In fact, foreign-based automakers that have set up assembly plants in the U.S. occupied seven of the top 10 spots. For GM, the Chevy Corvette represents its only mention among the top 10.
For Toyota and Honda, there are a couple of factors which allow them to stand out and jump ahead of the American icon Corvette in Cars.com's report.
First, consider the final criterion of Cars.com's report: total U.S. sales. The Corvette isn't geared to be America's best-selling car, and it never will be. It's an exclusive car built for the driving enthusiast and therefore won't appeal to a wide audience.
In contrast, Toyota's Camry, Sienna, Tundra, and Avalon, as well as Honda's Odyssey, are generally no-frills, family-oriented vehicles built with the idea of fuel-efficiency and quality in mind. Not surprisingly, as you can see below, these vehicles handily outsold the Corvette in 2013, and thus are easily able to hurdle it in Cars.com's report.
Graph by author, Source: Goodcarbadcar.net.
Secondly, both Toyota and Honda have been setting up shop in foreign markets regardless of fluctuations in the yen, and this includes the United States.
In theory, if the yen strengthens these foreign-based manufacturers can turn to U.S.-built components in order to save money. Even with a weaker yen the simple proximity of not having to ship their product overseas can be a big advantage.
Also, some states have even been willing to offer tax incentives in order to entice foreign-based automakers to expand their production line. In April 2013 Toyota announced a $147 million tax incentive from the state of Kentucky to expand its production line in Georgetown to include another vehicle. Keep in mind, Georgetown is already where all U.S.-sold Avalon's, and some of its top-selling Camry's, are manufactured.
Coupling tax incentives with favorable currency effects allows Toyota and Honda to feel right at home in the U.S., as well as to pad their pocketbooks as long as consumers keep buying their vehicles.
The American-Made Index isn't perfect, but it does lend to an interesting conclusion that Toyota and Honda are producing more cars that qualify as truly "American-made" than the big three in Detroit.
I'm not sure if this is something to be proud of, in regard to the U.S. being a lure for foreign businesses, or something to mourn, as true U.S. auto icons continue to distance themselves from their American heritage. That's something you'll have to decide for yourself, and let us know in the comments below.
But, "Made in America" doesn't carry the same weight as it once did. Nowadays, businesses from many sectors are forced to look outside our borders for parts and labor in order to reduce their costs and remain price competitive with their peers overseas.
Even in instances where products are being manufactured in the U.S., an increasing number of parts being used to manufacture those goods comes from outside the United States.
"Made in America" is hardly recognizable in this industry
Perhaps no industry has made this shift appear more transparent than the auto industry.
According to the ninth annual Cars.com American-Made Index report, the list of vehicles that qualify for ranking is dwindling dramatically. In order to qualify, 75% or more of a vehicles parts need to be manufactured in the U.S., the vehicle needs to be assembled in the U.S., and the final component ranks total domestic sales of the vehicle.
Based on those criteria, just 10 vehicles qualified in 2014. This is down from 14 vehicles in 2013, 20 in 2012, and 30 in 2011, and it speaks to the cost pressures that some of the biggest names in the auto industry are currently facing. In other words, automakers in increasing numbers are turning to foreign parts to cut manufacturing costs.
While Cars.com's annual report isn't a perfect measure of how "American" a car is, because it fails to factor in the emotional ties of a brand to American culture and the history behind an auto manufacturer or brand, it does offer insight into what vehicles are clearly helping American businesses. It could well offer clues as to what vehicles U.S. consumers might continue to buy.
Now, if you were to think of the most "American-Made" cars, there's a good chance that the Chevrolet Corvette would come to mind.
2014 Chevrolet Corvette Stingray, Source: General Motors.
5 foreign vehicles that are more "American" than the CorvetteArguably, the Corvette is among the most deeply rooted cars in American culture. But, according to Cars.com there are five foreign vehicles that are even more "American" than the Corvette, which finished seventh in the rankings.
2014 Honda Odyssey. Source: Honda.
I'll let the fact that two minivans are considered more American than the Corvette sink in for a moment, because I know I had to recover after reading it for the first time!
As noted by Cars.com, General Motors actually had at least one of its three-row crossover SUVs (the Buick Enclave, Chevrolet Traverse, and GMC Acadia) take a top-10 spot over the previous three years, but an uptick in foreign parts content removed them from qualifying this year.
In fact, foreign-based automakers that have set up assembly plants in the U.S. occupied seven of the top 10 spots. For GM, the Chevy Corvette represents its only mention among the top 10.
For Toyota and Honda, there are a couple of factors which allow them to stand out and jump ahead of the American icon Corvette in Cars.com's report.
First, consider the final criterion of Cars.com's report: total U.S. sales. The Corvette isn't geared to be America's best-selling car, and it never will be. It's an exclusive car built for the driving enthusiast and therefore won't appeal to a wide audience.
In contrast, Toyota's Camry, Sienna, Tundra, and Avalon, as well as Honda's Odyssey, are generally no-frills, family-oriented vehicles built with the idea of fuel-efficiency and quality in mind. Not surprisingly, as you can see below, these vehicles handily outsold the Corvette in 2013, and thus are easily able to hurdle it in Cars.com's report.
Graph by author, Source: Goodcarbadcar.net.
In theory, if the yen strengthens these foreign-based manufacturers can turn to U.S.-built components in order to save money. Even with a weaker yen the simple proximity of not having to ship their product overseas can be a big advantage.
2015 Toyota Camry. Source: Toyota.
Coupling tax incentives with favorable currency effects allows Toyota and Honda to feel right at home in the U.S., as well as to pad their pocketbooks as long as consumers keep buying their vehicles.
The American-Made Index isn't perfect, but it does lend to an interesting conclusion that Toyota and Honda are producing more cars that qualify as truly "American-made" than the big three in Detroit.
I'm not sure if this is something to be proud of, in regard to the U.S. being a lure for foreign businesses, or something to mourn, as true U.S. auto icons continue to distance themselves from their American heritage. That's something you'll have to decide for yourself, and let us know in the comments below.
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