Car Buying Articles
How To Buy an American Car
Your Choice Starts With Your Definition
People have lots of different requirements 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 touts its Avalon as an "All-American" car. It was designed, engineered and manufactured in the United States, and 75 percent of the content in the 2014 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 2014 Ford Fiesta, for example, was built in Mexico, with 20 percent of its parts coming from the U.S. and Canada and 50 percent from Mexico. Its engine could come from Brazil, the United Kingdom or Germany. The transmissions are even more international, hailing from Brazil, the U.K., the U.S., Germany 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 2014 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. It's built in the U.S. with more than 70 percent domestic parts. A car buyer last year 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?"
It is now. In January, Fiat SpA completed its purchase of Chrysler Group LLC, which produces Jeep. But would Italian corporate ownership prompt a star-spangled off-roader to cross a Jeep off her list?
Looking at the Label
On its Web site, 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.
Carmakers also can use the "halo effect" of some cars in a vehicle's line to bolster a claim of U.S. content in others, DuBois says.
He offers the 2013 Honda Accord as an example. It's shown in that year's AALA list as having 65 percent U.S./Canadian content and 25 percent Japanese content. The final assembly countries are listed as the U.S. and Japan. The engines come from either the U.S. or Japan, and the transmission comes from either Japan or the U.S.
Within the Accord line are both four-cylinder and six-cylinder models. The six-cylinder Accords are assembled in Japan, with a Japanese engine and a Japanese transmission, DuBois says. But because such a car is part of the overall Accord car line, a made-in-Japan Accord would still have a window sticker showing that it has 65 percent domestic content.
"You have to have a certain amount of skepticism," DuBois says. "Is this car really 65 percent American if it's assembled in Japan, with an engine and a transmission from Japan?"
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 do separate out variants within a car line in their AALA reports. Toyota separately lists its 2014 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 75 percent U.S. and Canadian content. The Avalon Hybrid, also built in the U.S., has just 50 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."
For example, compare these two SUVs: the four-door 2014 Jeep Wrangler and the 2014 Buick Enclave. In the AALA rankings (and in Edmunds' list of "Most American" SUVs), the Jeep ranks ahead of the Enclave, based on its slightly higher amount of U.S./Canadian content. Both vehicles are built in the U.S., with U.S.-produced engines and automatic transmissions. But in the Kogod index, the Enclave is the No. 2 vehicle on the list (tied with several others). The four-door Wrangler comes in at No. 8 on the index.
The difference? This year's index penalizes the 2014 Jeep Wrangler for Chrysler's shift from U.S. to foreign ownership. It's not quite as red, white and blue as it was in 2013.
Here's another example: The 2014 Chevrolet Malibu didn't make the cut for Edmunds' top five "Most American" sedans because two Toyota models (the 2014 Toyota Camry and 2014 Toyota Avalon) had 75 percent U.S./Canadian content and rank higher on the AALA list than the Malibu, which has 66 percent domestic content. But in the Kogod index's reckoning, the Malibu outstrips the two Toyota sedans for "American-ness" because it's a product of U.S.-based General Motors and because more of the car's R&D was done here. All three cars are assembled in the U.S.
Does it sound a little complicated? It is. For those who haven't done research before they go shopping for an "American" car, the easiest thing to do is zero in on a vehicle from a U.S.-based carmaker, and then find where it was assembled by reading the "parts content information" that should be shown on or near the window sticker. A look at the first number or letter of the VIN will resolve any lingering origin questions, such as those raised by the example of the Honda Accord.
Also, be sure to check out our lists of the vehicles with the highest percentage of U.S./Canadian content: convertibles, coupes, hatchbacks, SUVs and crossovers, sedans, trucks, vans and minivans, and wagons. Finally, "Foreign Cars Made in America: Where Does the Money Go?" explains the impact of foreign carmakers' U.S. production activities on the U.S. economy.
Does "Buy American" Matter?
People may say in surveys that buying an American car is important to them. But a 1999 study commissioned by NHTSA found that the government-required AALA labeling didn't much affect car purchases, DuBois said. There have been no follow-up studies.
"I'm still waiting for someone to do a study to figure out whether this makes a huge impact," he said. Car shoppers are likely more influenced by more practical considerations and the opinions of friends, family and car shopping and reviewing sites such as Edmunds.
But DuBois said he doubts that the desire to buy American will ever completely go away for some car shoppers.
"There's always going to be an element of ethnocentrism," in global trade, he says. The French believe they make the best wine. Germans brag about beer (and their cars, too). Americans like to root for automobiles that are born in the U.S.A., particularly after the domestic carmakers' return from near-death during the Recession.
For many people, having an American car (under whatever definition they choose) demonstrates their belief in not only the superiority of the vehicles, but of the country itself.
"We use country of origin as an indicator of quality," DuBois says. "It's part of how global rivalries play out."