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Automotive News & Views Buying American Cars What Does It Mean?
7263 messages, Last post on May 27, 2009 at 4:31 AM
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With parts coming from everywhere, does "Buying American" have much meaning anymore? Is quality and price the bottom line?
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Replying to: myershift (Oct 22, 2008 1:07 pm) This is commonly stated but I say incorrect. If you assume a profit margin on a car of 10% (it's actually less than that, and zero for recent US automakers), then 90% of the value of the car is spent where the parts are made, the car is assembled, and the advertising dollars are spent. 10% is sent to the country of origin. So for say, the Honda Accord: 90% of the money stays in the US (minus any foreign components) - workers, factories, parts, advertising, etc. 10% - goes to Japan For the Ford Fusion: 90% of the money stays in Mexico (minus any components sourced from the US) 10% of the money (if it were profitable at all) would go to the U.S. So explain again why it's better to buy a Fusion than an Accord?
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Replying to: myershift (Oct 22, 2008 1:07 pm) You are assuming that the profits are much larger than the salaries paid out / investments being made. Considering that even very successful auto companies struggle to make 10% net margins, I would say the country which is receiving the salaries and investments is better off (especially when there are no profits to be made at all) - at least in terms of cash-flows.
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Replying to: manegi (Oct 22, 2008 9:11 pm) Here is the story of a guy who made money, shared and is now helping people in Detroit. He is a saint on earth. Proves you can use money to help people outside the board room! GM, Chrysler, Ford...this is for you guys/gals to digest! Bob Thompson Regards, OW |
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Replying to: fezo (Oct 22, 2008 2:22 pm) Philadelphia was once home to the large appliance and consumer electronics manufacturer Philco. Now the only things manufactured in the neighborhood where Philco was once located is crack rocks and blunts.
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Replying to: fintail (Oct 22, 2008 5:34 pm) |
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Replying to: lemko (Oct 23, 2008 6:16 am) And I'm sure once the Japanese, Koreans, or whomever figures out how to make those commodities cheaper, while still maintaining quality, manufacture of those will be moved overseas as well! 
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Replying to: myershift (Oct 22, 2008 1:07 pm) Even if domestic automakers assemble cars and pay workers in say, Canada or Mexico, the profits ultimately go back to the home country's companies. Those profits are what help develop new models, more factories and workers in the U.S. The kind of thinking demonstrated here is one reason why U.S. automakers are flailing so badly. Just because a Honda, Toyota, Hyundai, Nissan, Volkswagen, Mercedes-Benz, or BMW are put together in the U.S., this does NOT make them an American car and the profits made from those cars do ultimately go back to Japan or Germany; depending on the brand. I don't see how your thinking is any less flawed. Labor and parts (and their associated labor costs) are most of the cost of building a vehicle, and when a vehicle has 60-80% domestic content, that means that most of the money stays here...just as it is with Accords and Camrys and many other "foreign brand" vehicles built in the US. And then there's the "profits" that "are what help develop new models, more factories and workers in the U.S." All of the major foreign manufacturers have engineering and design and R&D facilities in the US...and all of them work on products for the US (as well as for other countries), employing Americans to do that work. And where does the money come from (and more importantly where does it go) to build those NEW plants they keep building? What about all of those people foreign manufacturers employ in such foreign countries as Michigan and California, and Arizona and Indiana and Texas...where their money recirculates throughout the US economy? Yes, some profits leave the US...but so do monies generated by GM and Ford. |
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Replying to: sidious6688 (Oct 22, 2008 4:52 pm) Then I guess it's NOT "all things being equal" now is it, if your going to demand "better" instead of "equal".
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Replying to: tlong (Oct 22, 2008 8:38 pm) Agree that you do more to help this country and your fellow Americans by spending your money on the Accord especially if the other choice is the Fusion. It is the 'American' manufacturers that are largely abandoning this country while those' foreign' ones put money into it. Toyota can spend a cool billion building a truck plant in Texas, wonder how much Ford is spending down in Mexico so they can build their trucks, or even worse, how much of that money they really don't have are they spending buying out labor contracts putting even more Americans out of work. 
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Replying to: captain2 (Oct 23, 2008 2:06 pm) I also think of the retired auto workers who, with their pensions and health care costs minimal, can "trickle down" far more than someone with just Social Security and a 401k, but have to pay for all their healthcare after medicare. But, that must not count.
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Automotive News & Views Buying American Cars What Does It Mean?
