Your American Car Is Probably Not as American as You Think
Want to buy American when it comes to your next ride?
The latest version of Cars.com’s annual list of the most “American” cars assembled in the U.S. came out on Tuesday. But you may be surprised how little it takes to be considered really American: just 55% of the total value of the car parts is enough to qualify. And, because the data comes from reports mandated by the American Automobile Labeling Act of 1992, there’s additional hidden confusion. The legislation lumps together parts and content from the U.S. and Canada, so the strictly U.S. portion could be less.
“Automakers build plenty of vehicles here, but a lot of cars here are less American than you think,” said Cars.com senior consumer affairs editor Kelsey Mays. For example, the iconic Ford F-150? It’s 56% American content, according to the study. “GM SUVs are built near Dallas with US engines and transmissions, but only 41%,” and so aren’t even on the list.
More “American,” in terms of total dollar value of their parts, are the numbers 1, 2, and 3 on the list: the Jeep Cherokee, made by Italy-based Fiat Chrysler, and the Honda Odyssey and Ridgeline, all three of which come in at 70%. Note, though, that the dollar value focus can mean some very expensive parts, like the computers that run engines these days, can tip the balance while significant numbers of components come from elsewhere.
“Certain engines in the F-150 have countries of origin of Mexico and Canada,” Mays said. “The United Kingdom is the country of origin for the diesel [model’s engine].”
Fortune asked both GM and Ford for comment. GM replied that it had four of the top 15 vehicles for U.S. content and “has announced investments of more than $23 billion in its U.S. manufacturing operations in the last decade, across 11 states.” A Ford spokesperson pointed to the Kogod 2018 Made in America Auto Index, from the Kogod School of Business at American University. In that index, F-150 models held the third position with an estimated 65% U.S. and Canadian made. But the index uses a much broader concept than Cars.com, with seven criteria that include profit margins, R&D spending, and inventory and capital use in the U.S.
Trying to understand where cars are built is difficult because of the global nature of auto manufacturing. “Sourcing and parts is a complex business for vehicles,” said Jessica Caldwell, executive director of industry analysis for automobile information publisher Edmunds. “Foreign vehicles can be made here and American cars can be built in Mexico. Car parts come from a wide variety of sources.”
Even in 2006 when Cars.com first began the American-made study, the top ranked vehicles would have between 85% and 90% U.S. content. That’s dropped significantly over the years. Caldwell points to industry changes. Manufacturers are pushing toward electric and autonomous vehicle development but have to fund the work out of their revenue streams while new car sales have been falling in the U.S.
“Last year, there were about 17.3 million new vehicles sold in the U.S.,” she said. This year, estimates are 16.9 million. “Rising costs particularly with interest rates have made [new car purchases] too expensive for consumers,” Caldwell said. Many people have turned to used cars that have longer lifespans at relative bargain prices. “The average transaction price for a new vehicle in May was just about $37,000.” All the tech like Bluetooth and backup cameras helps jack up the cost.
Still, people in the U.S. care about buying American, according to the Cars.com survey. About 66% of all shoppers “want to buy a car that substantially impacts the US economy,” said Mays. Younger people are a little insistent but not much, as 61.3% of those from 18 to 34 wanting the same.
You can see for yourself when car shopping: The percentage of U.S. or Canadian content will either be directly on the sales sticker or on a secondary one by it.
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