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What percentage of your vehicle’s value contributes to the overall well-being of the U.S. economy? How does your car impact the U.S. automobile industry’s economic vitality? And, most importantly, why does this information matter to you?
Kogod’s 2016 Made in America Auto Index seeks to answer these questions by evaluating the domestic content of vehicles sold in the US. The index takes into account other aspects of vehicle manufacturing that are not accounted for in other measures. Seven criteria are considered, including profit margin, labor, and research and development location, among others.
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In 2015, of the 17.5 million vehicles sold in the U.S., approximately 65 percent were produced in the United States. That same year, the auto industry directly employed approximately 1.55 million workers and supported an additional 5.7 million jobs in repair shops, part supply stores, and car dealerships.
As such an important part of the U.S. economy, understanding the factors that influence the automobile industry is not just helpful—it is essential. A vehicle’s domestic manufacturing composition plays a key role in determining its overall impact on the American economy. This knowledge empowers consumers and automakers alike to make better economic decisions about where a car is made, and which offer the greatest commercial benefits to the country.
One of the first things a consumer looks at while car shopping is the price and options label. Since the enactment of the American Automotive Labeling Act (AALA) in 1994, automakers are required to provide information on the label detailing the amount of U.S. and Canadian parts content, the country of assembly, and the engine and transmission’s country of origin.
AALA data, while useful, is not the most accurate means of assessing a vehicle’s contribution to the U.S. economy. It presents a number of limitations; U.S. and Canadian content are combined into one number, and automakers are allowed to round-up a part that is potentially only 70% U.S./Canadian to 100% U.S./Canadian.
Kogod’s method improves on the AALA data by incorporating a more comprehensive research methodology, providing consumers with a more accurate view of their vehicle’s composition.
|RANK||MAKE||MODEL||OEM||US COMPANY||ASSEMBLY||ENGINE||TRANSMISSION||2016 AALA||PROFIT MARGIN||LABOR||R&D;||TRANSMISSION||INVENTORY, CAPITAL, OTHER EXPENSES||BODY, INTERIOR, CHASSIS, ELECTRICAL, OTHER||TOTAL DOMESTIC CONTENT|
|1||Buick||Enclave||General Motors LLC||1||1||14||1||80%||6||6||6||7||11||40.00||90.00|
|1||Chevrolet||Traverse||General Motors LLC||1||1||14||1||80%||6||6||6||7||11||40.00||90.00|
|1||GMC||Acadia||General Motors LLC||1||1||14||1||80%||6||6||6||7||11||40.00||90.00|
|2||Ford||F150||Ford Motor Company||1||1||14||1||70%||6||6||6||7||11||35.00||85.00|
|3||Chevrolet||Corvette||General Motors LLC||1||1||14||1||66%||6||6||6||7||11||33.00||83.00|
|4||Chevrolet||Equinox||General Motors LLC||1||1||14||1||65%||6||6||6||7||11||32.50||82.50|
|4||Chevrolet||Impala||General Motors LLC||1||1||14||1||65%||6||6||6||7||11||32.50||82.50|
|4||Chevrolet||Malibu E2 Gen||General Motors LLC||1||1||14||1||65%||6||6||6||7||11||32.50||82.50|
|4||Chevrolet||Malibu LTD||General Motors LLC||1||1||14||1||65%||6||6||6||7||11||32.50||82.50|
|4||GMC||Yukon, Yukon EXT||General Motors LLC||1||1||14||1||65%||6||6||6||7||11||32.50||82.50|
|4||Cadillac||Escalade||General Motors LLC||1||1||14||1||65%||6||6||6||7||11||32.50||82.50|
|4||Buick||LaCrosse||General Motors LLC||1||1||14||1||65%||6||6||6||7||11||32.50||82.50|
|4||Chevrolet||Tahoe, Suburban||General Motors LLC||1||1||14||1||65%||6||6||6||7||11||32.50||82.50|
|5||Honda||Accord||Honda Motor Co., Ltd.||0||1||14||1||80%||0||6||3||7||11||40.00||81.00|
|6||Jeep||Wrangler Unlimited||Fiat Chrysler Automobiles||0||1||14||1||73%||3||6||3||7||11||36.50||80.50|
|6||Ford||Taurus||Ford Motor Company||1||1||14||1||61%||6||6||6||7||11||30.50||80.50|
|6||Buick||Verano||General Motors LLC||1||1||14||1||61%||6||6||6||7||11||30.50||80.50|
|6||GMC||Canyon||General Motors LLC||1||1||14||1||61%||6||6||6||7||11||30.50||80.50|
|6||Chevrolet||Cruze LTD||General Motors LLC||1||1||14||1||61%||6||6||6||7||11||30.50||80.50|
|6||Chevrolet||Colorado||General Motors LLC||1||1||14||1||61%||6||6||6||7||11||30.50||80.50|
|7||Ford||Explorer||Ford Motor Company||1||1||14||1||60%||6||6||6||7||11||30.00||80.00|
|7||Ford||Mustang||Ford Motor Company||1||1||14||1||60%||6||6||6||7||11||30.00||80.00|
|7||Cadillac||ATS||General Motors LLC||1||1||14||1||60%||6||6||6||7||11||30.00||80.00|
|7||Cadillac||CT6||General Motors LLC||1||1||14||1||60%||6||6||6||7||11||30.00||80.00|
|7||Cadillac||CTS||General Motors LLC||1||1||14||1||60%||6||6||6||7||11||30.00||80.00|
The index uses seven points derived from publicly available data.
The components of the index are based on research into the economic value of different components of auto manufacturing that was done by the Center for Automotive Research in Ann Arbor Michigan. For example, the highest ranked cars are made by U.S. based manufacturers using American engines and transmissions, and a with a high AALA percentage of U.S. and Canadian parts.
The seven criteria are as follows:
In 2014, Fiat acquired the outstanding shares of Chrysler. The new entity, Fiat Chrysler Automotive (FCA), is headquartered in the Netherlands with a tax domicile in London, and shares listed on the New York Stock Exchange. As such, because of the hybrid nature of its organizational structure and its large production and R&D; presence in the U.S., we assigned a value of 3 for profit margin and R&D;, rather than a 6 or 0.
The index shows that vehicles produced by automakers headquartered in the US rated higher overall in the index. This is for two reasons: (1) profit derived from their sale was more likely to return or remain in the United States; and (2) a majority of a U.S. company’s R&D; activities are located in the US.
The index also finds that foreign companies were more likely to use fewer US-produced parts, even if they utilize American manufacturing locations. US economic impact is lower, as the vehicle’s home country receives much of its profits. While the data contained in the AALA is important, a true index of “localness” must recognize other things such as company’s country of origin, as well as the location of its research and development activities.