3 Myths You Still Believe About Automotive Manufacturing

Last year's "Halftime in America" ad from Chrysler was probably meant to inspire patriotism and allude to the resurgence of American automotive manufacturing. What this ad failed to mention, though, was that it was brought to you by an Italian company.

The idea of buying "American cars" is in several ways a myth that is used to sell cars -- and it's not the only one.

Myth 1: Buying "American" cars
When Americans hear the term "American car," our knee-jerk association is the American brands. While it is true that General Motors (NYSE: GM  ) , Ford (NYSE: F  ) , and Chrysler originated in the United States, it doesn't necessarily mean the cars they manufacture are more American than the foreign brands. Every year, Cars.com puts out a list of the most "made in USA" cars on the road. This list measures whether the car is assembled in the U.S., and the percentage of parts that originate here. Of the 2012 models, five of the top seven come from Japanese manufacturers.

Car Make and Model

Assembly Plant

Percent "Made in U.S."

Toyota Camry

Georgetown, Ky.

80%

Ford F-150

Dearborn, Mich.

60%

Honda Accord

Marysville, Ohio

80%

Toyota Siena

Princeton, Ind.

75%

Honda Pilot

Lincoln, Ala.

70%

Chevrolet Traverse

Lansing, Mich.

75%

Toyota Tundra

San Antonio, Texas 

80% 

Sources: Cars.com and abcnews.go.com.

Many assume that each manufacturer has specific parts. This just isn't true anymore. Automotive parts manufacturers generally don't discriminate between the foreign and domestic brands. Take chassis and electronics specialist TRW Automotive Holdings (NYSE: TRW  ) ; it supplies parts to more than 40 manufacturers around the world. For parts companies to pigeonhole themselves into producing for only one automotive manufacturer would simply be bad business.

Myth 2: U.S. automotive companies are shipping jobs overseas
If you have followed the presidential debate to even the smallest degree, you're probably aware of all the hoopla around shipping automotive jobs overseas. Both political parties made several talking points on strengthening American manufacturing and to stop sending jobs overseas.

But why should we be up in arms about factories in China that are making cars for the Chinese market? Last year, China surpassed the U.S. to become the largest vehicle market in the world. For American companies to get a piece of this 18 million-vehicle-a-year pie, they need to be in China to meet that demand. Ford just announced the opening of its sixth Chinese plant in August, and GM just broke ground on a 7 billion yuan ($120 million) plant in Wuhan, China, this June. 

Contrary to political messages, this surge in demand from China actually creates more jobs in the United States. From 2009 to 2011, overall U,S, auto component exports increased 36.5% ($88.3 billion to $120.5 billion), where imports increased by only 5.3% ($215.9 billion to $227.3 billion). The increased demand for American automotive parts has been a contributing factor in creating more than 236,000 jobs in the automotive industry since 2009.

There are several occasions where a plant closes in the U.S. and another opens in China on the same day, so it's easy to make the correlation. But in reality, overall automotive jobs are increasing in the U.S. and China. So the idea that Chinese workers are taking our manufacturing jobs seems a bit far-fetched.

Myth 3: Stricter emission regulations will cripple the industry
Back in May, the Obama administration issued guidelines to the EPA to increase miles-per-gallon (mpg) standards for vehicles. Under the new regulations, automotive manufacturers will need to have their vehicle fleets attain a Corporate Average Fuel Economy (CAFE) of 54.5 mpg. Several political and industry representatives have railed against these regulations, claiming that they will price several customers out of the market and cause manufacturers' profits to tumble. There are two points to refute this argument:

  • It does not consider disruptive change through better technology, which could shift industry dynamics.
  • Companies have been expecting these regulations for quite some time.

There are several caveats in the regulation that encourage the shift to natural gas, hybrid, and full plug-in electric vehicles. The technologies for these kinds of vehicles will play a very large part in shaping the methods to manufacture cars. Companies that take a big jump into these areas early on will most likely reap the greatest benefit as these regulations get tighter.

Electric-car manufacturer Tesla Motors (Nasdaq: TSLA  ) went all in with the concept of plug-in vehicles, and its technological developments could be a very valuable commodity for the major manufacturers. Also, natural gas engine designer Westport Innovations (Nasdaq: WPRT  ) has developed a strong profile of heavy-duty engines. These engines translate well to light-duty pickup trucks, some of the least efficient vehicles in the major fleets. Ford was the first of the big Detroit Three to partner with Westport and will be introducing a natural gas engine option in its F-series trucks .

It would be hard for a company to argue that it didn't see these new regulations coming. In 2006, the National Highway Traffic Safety Administration petitioned to change CAFE standards for light-duty pickup trucks, but the rule was overturned. In 2007, the Bush administration enacted the Energy Independence and Security Act of 2007, which mandated a 40% increase in fuel economy standards. This ruling did not change CAFE standards, though.

These initiatives were a telling sign for manufacturers that changes were due to come to the industry, and several companies have prepared in advance. During the 2012 Citigroup Global Industrials Conference, Cummins (NYSE: CMI  ) Vice President Mark Levitt noted that Cummins has already begun work on increasing fuel economy for its engines. He also pointed out that these fuel economy standards are in line with customer demands for better fuel economy, so customers will be willing to pay a higher premium for what they perceive as value.

Of course, the industry 10 to 15 years from now will be different, but that doesn't necessarily mean it will be bad for everyone. Yes, there will be companies who lose out and fall behind, but there will also be winners who had the foresight to adapt to the times.

Ford has been performing incredibly well as a company over the past few years, and GM is starting to follow suit. But Ford's and GM's stocks seem stuck in neutral over the past year. Does this create an incredible buying opportunity, or are there hidden risks with the stocks investors need to know about? To answer that, one of our top equity analysts has compiled two premium research reports with in-depth analysis: Is Ford a Buy Right Now? and GM: A Turnaround Story Gaining Traction. Simply click here to get instant access to this Ford premium report, or click here for the premium report on GM.

It's easy to get caught up in the hype and myths in almost any industry. But as any great investor will tell you, you need to tune out the noise and investigate the facts yourself. 


Read/Post Comments (30) | Recommend This Article (46)

Comments from our Foolish Readers

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  • Report this Comment On November 08, 2012, at 11:27 AM, TMFMarlowe wrote:

    Good article. One quibble:

    "Many assume that each manufacturer has specific parts. This just isn't true anymore."

    Actually, it is. There are very few common parts shared between automakers. TRW (and JCI and MGA and LEA and all the other Tier One suppliers) do make parts for just about everybody, but those parts are almost always unique to each automaker, and often to specific platforms.

    To the larger point... any Ford made anywhere is an "American" car in the sense that the profits ultimately come home to Dearborn, just as the profits on all those "American" Camrys go home to Japan, even if Toyota sometimes seems to want its American customers to forget that.

    Cheers,

    John Rosevear

  • Report this Comment On November 08, 2012, at 12:50 PM, TMFDirtyBird wrote:

    I wanted to convey what you said about parts manufacturers, but your explanation was much more elegant. Thanks for the assist

  • Report this Comment On November 08, 2012, at 1:41 PM, damilkman wrote:

    In my opinion myth 3 is sort of swept under the rug and the author underestimates the hurdles auto companies have to make. For starters the entire CAFE standard is a false standard that just transfers the cost from one group to another. Pure electrical plays, hybrid, and natural gas will have to be subsidized down and sold at a lost. That lost will have to be recovered by selling cheaper internal combustion based cars at a higher margin. The authors post on how automobile companies will make these numbers proves the foolishess of a central govenrment that attempts to artificially manipulate the market. The numbers will not be made by improving the efficiency of internal combustion engines but playing games with the formula by selling enough alternative energy cars that are expensive, of limited utility, or reliability. As we all know there is a limit to MPG if your energy transfer method is heat.

    The CAFE standards are just another useless mandate that fullfills someones requirement for rhetoric. It is about as useful for fostering energy independence as ethanol or wind. Instead of concentrating on the future inflection point when a visionary company could make the big leap, automobile companies are forced to scramble to rush inmature technologies and waste valuable resources to make a technocrats spreadsheet numbers.

    I will present Myth4. The expectation that a central government can manipulate market forces to do something contrary to supply and demand while keeping the current supply cheap is utterly foolish. Maybe our infaliable technocrats should present a CAFE standard for food. You must sell so much healthy food or be penalized. But were going to make sure all the unhealthy food is dirt cheap. 5 year plan here we come ;)

    If somone had the fortitude to make gas expensive, everything would fall into place. If you look at the EU a significant amount of the population makes do with tiny cars. The limited utility is made up by the affordibility. Changing the supply is a far more efficient method if a centrl government wishes to manipulate a market.

  • Report this Comment On November 08, 2012, at 1:52 PM, TMFMarlowe wrote:

    @damilkman: Actually, the CAFE standards are useful (to the industry) in one important sense: They allow the automakers to know what the lay of the land is going to be several years down the road.

    New cars aren't developed overnight. It takes 3 years, more or less, to get from an approved idea to the first car off the line. Having some visibility into what kinds of cars (and what mix of vehicles) the market will require 3, 5, 10 years from now is a huge time-and-money saver for all of the automakers.

    And yes, those gains will be made in part by improving the efficiency of internal combustion engines. It's already happening. Look at Ford's EcoBoost line, for starters, or the technology GM's just-announced next-gen V8s.

    John Rosevear

  • Report this Comment On November 08, 2012, at 3:06 PM, damilkman wrote:

    I agree cars are not developed overnight. If an automobile company is foolish not to think ahead like the early 70ties, let the smart ones thrive and foolish ones be acquired. I just looked up the projected MPG on the EcoBoost for a Taurus and it is inferior to my early 90ties Honda Accord. Plenty of cars were getting 30mpg 20 years ago. So you seriously believe there is a breakthrough that will allow automobiles to get 50mpg with the same sized engines, power, and cars? I say absolute rubish.

    What I will say is I did drive a nice tiny Citroen in France. By sticking to the speed limit I was getting about 50mpg. All those traffic circles help as you don't have to stop. The difference in France is gas cost 3 billion euros a liter. The Citroen got me from A to B. It had minimal room for not much more then our 3 small suitcases. I felt like any truck accident would leave an imprint in the road. But if gas is three times more expensive I understand the risk. Again, I still say fixing the supply side.

    This is the same case for any compodity. We have the same problem with water out west. Why should a farmer conserve water if the governement sells it to him ultracheap. Make it more expensive and he will conserve it.

  • Report this Comment On November 08, 2012, at 5:39 PM, Thomaseric48 wrote:

    Toyora Carolla is now built in Tupelo, MS

  • Report this Comment On November 08, 2012, at 6:20 PM, jrow62 wrote:

    I think your behind time. They are already driving hydrogen cars on the west coast. Scrap the batteris and move to hydrogen. Who do you think can afford $12000.00 - $15000.00 to replace a battery? GM's estimate.

    John

  • Report this Comment On November 08, 2012, at 6:23 PM, xetn wrote:

    It seems to me that if consumers want better mileage from their vehicles, and demand it, and be willing to pay for it, they would be produced. Therefore there is no need for the government to dictate new mileage requirements and force everyone to pay for it.

    This is just another type of regulation that costs the industry and the consumer by coercion.

  • Report this Comment On November 08, 2012, at 6:32 PM, pancratski wrote:

    #John R,

    Not all profits go to Japan, Share holders get a dividend...

  • Report this Comment On November 08, 2012, at 6:46 PM, fredbee wrote:

    #4-Princeton Idaho? One would be hard pressed to build a covered wagon there.

  • Report this Comment On November 08, 2012, at 7:15 PM, meade78 wrote:

    Just finished a 1300 mile trip up the east coast in my 2011 Jetta diesel. Averaged 45mpg at the speed limits. The technology is there. And it drives like a car, not a truck.

  • Report this Comment On November 08, 2012, at 7:43 PM, atthelakejim wrote:

    Great article. Some like to quarrel with the facts, but unless our 'American' car companies get to work and use available technology to make more acceptable products, the same thing that happened back in the 80s and 90s will happen again only this time it may be the Chinese making the better produce instead of the Japanese.

  • Report this Comment On November 08, 2012, at 8:11 PM, twobeerjohn wrote:

    It isn't that the Japs don't manufacture here in the US, it is that the average wage in a jap plant is $14 per hour vs. $28 per hour in an American plant, so considering that the Jap cars cost as much, if not more, then ther is more money being sent back to mama Japan. The American companies like Ford, keep the money in the US. Chrysler is no longer an American car company since it is owned by Fiat, and the money now belongs to the Italians. And government motors took a bailout, leaving Ford as the last true American automobile company. All hail FORD!!!!!!!!!!!!!!!!

  • Report this Comment On November 08, 2012, at 8:47 PM, mythshakr wrote:

    1. The CAFE standards have been useful in reducing the amount of imported oil over the past 20 or so years.

    2. Interesting that all the major auto manufacturers are lobbying to get the feds to use the California Lev3 emissions standards requiring cleaner gas. The API is not amused.

    3. Most corporations keep their profits in the originating country. So GM keeps it's China profits in China and Toyota keeps it's US profits here. Why do you think corporations want to get rid of the repatriation taxes.

    4. So we would be better off with significantly higher gas prices? I agree. But you don't want it to be by government taxes. So, you are expecting collusion between oil companies to "artifically" raise prices? As high as the number of people who don't like the taxes, it's a pittance compared to the people that would demand heads rolling for higher oil company profits. Can you say windfall profits tax? Just what would you propose?

    5. For those of us who remember, the origin of all these "Standards" was to help level the playing field after the '73 oil embargo and the Japanese auto manufacturers were just destroying the American manufacturers who continued to insist that americans didn't want those little fuel efficient cars but really wanted big, heavy, powerful, inefficient cars. It wasn't until 1980 that Detroit got a clue and they still insisted it was just a fad.

    6. American auto manufacturers are finally understanding that the old "we'll tell them what they want" attitude (GM: what's good for GM is what's good for America, Ford: they can get any color they want as long as it is black) is very dead. The fact that none of the "American" auto manufacturers had a competitor to the Prius by 2005 or 6 is pretty pathetic.

  • Report this Comment On November 08, 2012, at 8:48 PM, jrzdvl wrote:

    This may be the most misleading article I have ever read on Motley.Obviously the writer has a Jap car or two amd wants to quell the "buy American" crowd.

    Myth "1" is nonsense on both points. First, the Japanese cars built here are simply assembled of Japanese parts. Most of the profits from these cars go back to the Japanese economy, not ours.

    The second point of "1" says "many assume that each manufacturer has specific parts. That simply isn't true anymore". Really? Then I can go to a Ford, Dodge or Toyoto dealer and buy, oh, lets say suspension, engine, brake or transmission parts for my 2012 GMC, right? It doesn't matter that TRW builds parts for 40 other makes, that does not make your case at all.

    Myth "2" only partly correct. "American automotive companies are shipping jobs overseas." This is not a myth. As you pointed out above, correctly, many parts in all American made cars are made overseas. Would our jobs situation not be better if those parts were made here? Our problem with jobs being sent overseas isn't for the stuff that is going to be sold there, it is for the stuff that is shipped back here and sold here. It should have been made here.

    Myth "3". Stricter emissions regulations will cripple the industry. They might not cripple the industry but they will make cars so expensive, to buy and repair, as to hurt the working class Americans just to make a few in our government agencies feel they have saved the world.

    Cute of you to say "customers will be willing to pay a higher premium for what they perceive as value. You should be working for the government, Crowe. Seems to me I have read somewhere lately that middle class income is actually retreating, but who cares, our Prez will save us.

  • Report this Comment On November 08, 2012, at 10:44 PM, TOM48 wrote:

    The answer to our unemployment & energy problems is for GM to start building a fleet of natural gas cars. Install a natural gas pump at every GM dealership. Instead of rebates, they give their customers natural gas credit card that can be used at any GM dealer. You will be able to drive across the country with out fear of not being able to find fuel. Dealers could give discounts on maintence by adding funds to their GM natural gas card, thereby, increasing traffic at dealerships all across the country. Since natural gas burns cleaner, would currently sell for about $1.83/gal instead of $3.50 for gas, car sales would increase very quickly, more shifts would have to be added at the manufacturing plants to keep up with the demand for these new vehicles. If GM was really smart they would buy Westport in order to have all of their patents for natural gas engines. Who would not like this? It is a plan that is green, makes us energy independent, & when you add in the increase in natural gas drilling & pipe lines, we will have employed about 2 million more people. Damn, I should have run for president with this platform.

  • Report this Comment On November 09, 2012, at 4:24 AM, gene132 wrote:

    Automobiles are a global industry. Yes, parts are shared between makes, that has been true for years. But the fact is, the USA based firms have been dragging their feet for years-how else can you explain GM making the same junk year after year?The Japanese makers improved the quality of their vehicles by using quality control and FMEA to drive down costs and decrease defects-while GM's philosophy was "ship it"-if it comes back for repair, screw the customer-that is why GM cars have more defects than Toyota cars. And notice-the asian transplant factories are all in non-union, right to work states-the UAW has been killing the industry for years(not because of wage rates, but the insane union "work rules").

  • Report this Comment On November 09, 2012, at 9:41 AM, neelvk wrote:

    For those railing against CAFE standards:

    I agree that it is a dumb way of improving standards but you guys would be up in arms if gas was $12/gal tomorrow morning. In US, the average fuel efficiency across all cars is about 20 mpg. This is pathetic. No wonder we are sitting in the back pockets of the beacon of democracy - Saudi Arabia. If our cars' average fuel efficiency was 40 mpg, we wouldn't need *ANY* oil from the Middle East. We can tell those troglodytes to take a hike.

    Building fuel efficient cars for the Japanese market gave Toyota et al a lot of experience so that when we had our oil shock, they got a huge boost in this market. GM tried for years to sell normal American cars in places like India and China and couldn't get any penetration. They succeeded only when they brought European-designed cars to these countries.

  • Report this Comment On November 09, 2012, at 10:54 AM, Sohomish wrote:

    Technology and CAFE will theoretically enhance fuel economy, however, until Americans learn how to, and have the political will to, drive to maximize fuel economy, it will remain theoretical. We have achieved fuel economy of 48 mpg hiway with our 1.4 L turbo gas fired Chevy Cruze on trips of several hundred miles. But only when consistently driving between 55 and 65 mph. We felt like right lane road kill as vehicles swerved to avoid a collision. Oh yeah, the speed limit was 60 mph.

  • Report this Comment On November 09, 2012, at 11:26 AM, Spw225 wrote:

    1&2 ok. #3 is baloney. Govt involvement in markets never works. Seems to me we just bailed out the auto industry. Government Motors Volt has been a disaster that everyone has had to pay for, and directly contradicts this 3rd argument. Tesla is another example of 100k Plus cars that only 1% ers can purchase. All require taxpayer support. GM, Chrysler went bankrupt remember. This article simply presents a liberal agenda, give two ok points to sell a third foolish point. Rather than support consumer freedom of choice, energy development and free markets, this would have us believe, post bankruptcy, and taxpayer bailout, that all we need is even more government regulation.

  • Report this Comment On November 09, 2012, at 11:46 AM, 48ozhalfgallons wrote:

    I have a standard shift 2008 Focus. @ 80mph with air it routinely gets 40+mpg running non-ethanol regular. At 65, without air it gets 44-48. In town, 31. I believe Ford let one out of the bag with this individual vehicle. The torque-y 4 banger could easily handle a 6th gear at speeds above 60mph. I could envision another 3-5 mpg with such gearing.

    Why aren't these specs common for all vehicles in this class? This performance proves there are incentives for manufacturers holding back. Go figure!

  • Report this Comment On November 09, 2012, at 1:27 PM, RaulChapin wrote:

    Tyler: Just a quick question, would there be a statistic on what % of each company is owned by individuals of which nationality?

    I am thinking this is damn near impossible as I would assume that most of the car making shares are held by mutual funds and other institutional investors, shares of which might be owned by individuals or yet other institutional investors.

    So I would be surprized if profits actually go to Japan, or USA or Italy, but instead end up in the hands of the investors that have the most money invested in the companies... so who knows, it could be people from Argentina for all we know, am I being foolish?

  • Report this Comment On November 09, 2012, at 2:21 PM, Darwood11 wrote:

    Interesting article.

    First, if a company keeps substantial amounts of the cash it earns on the planet overseas, at what point does it remain an "American" company? Microsoft, Apple and others come to mind, but I suspect it's only a matter of time until automotive manufacturers also remain "American" in name and perception only. It's a good way to sell product in the US.

    Second, natural gas powered vehicles, given an honorable mention in this article, have been glossed over because of political pandering and political BS. Let's be real here. As 42% of the electricity generated in the US comes from fossil fuel burning coal fired power generating plants, a "zero emission" vehicle as a description is not only a joke, it is downright deceiving for anyone who uses it. 68% of our electricity on the grid is derived from all fossil fuel (carbon) sources, and 19% from nuclear. This according to the EIA statistics for 2011. Tesla, for their credit, describes their electric coupe as having "zero tailpipe emissions." True, if one ignores the thousands of stacks on the coal power plants feeding the grid. But some of those are 800 feet tall, and miles away, so I guess they won't be considered. Best way to solve this problem is for someone to figure out how to build an electrical transmission system from China to California.

    Third, If we consider the US government as an owner of some of the stock in these so called "American" companies, they probably should be segregated and called "government companies." Lets put them in the same container as the Department of Agriculture and the Department of Labor.

    Fourth, comparing percentages is somewhat deceiving. For example, an increase from $100 to $110 is a 10% increase. So is an increase from $100 Billion to $110 Billion. But in absolute terms, there is a tremendous difference. if there weren't, the Fool wouldn't be trumpeting the wonders of BRK stock. It would be trumpeting the likes of small investors such as me, as I've actually done better. but at a much, much smaller scale, and without special terms from GE, etc.

    Fifth "Cummins (NYSE: CMI ) Vice President Mark Levitt noted that .....fuel economy standards are in line with customer demands for better fuel economy, so customers will be willing to pay a higher premium for what they perceive as value." No, it has nothing to do with value. In this case, it's all about operating cost. As long as fuel prices stay above $4 a gallon, there will be a demand by truckers for more efficient engines. The trucking industry has lost a lot of business to rail in the past few years. This trend will continue, and as with the airlines, fuel costs are significant for this mode of transport. Businesses can't raise taxes, or print money. So they are forced to reduce costs so as to improve the bottom line. I don't think it's appropriate to call this "creating value." Reducing operating costs is that, and nothing more. For the 20 something who buys a vehicle they can barely afford, that bluetooth system or the wonderful flat screen display will "create value" and they will willingly flush an additional $10K to get it, instead of purchasing a vehicle in the range $15K - $20K. That's called marketing, and it's why many people spend $5 for a cup of coffee.

  • Report this Comment On November 09, 2012, at 2:33 PM, retbubhead wrote:

    How interesting that people want to squabble about the origin of car parts and that they are specific to one manufacturer. That is rubbish. Look at headlight assemblies on most new cars. The housings may be a different shape, but the lamps and ballasts are all the same. Additionally, go try and use an SAE tool on most parts of an American car and you will find that almost ALL of them are metric fasteners. Closer inspection will reveal that many of the parts are made overseas, such as the parts in my Corvette being assembled in Mexico.

    The biggest reason I buy Hondas for my every day car has less to do with the vehicle and more to do with customer service and maintenance at the stealership.

  • Report this Comment On November 09, 2012, at 3:02 PM, damilkman wrote:

    From the comments section it appears that if a consumer is motivated to buy a car that gets 50mpg they can purchase one today. The problem with the CAFE standards is it forces the automobile companies to distort their inventory to fit an artificial requirement. How do you on a macro scale manipulate consumers to purchase cars that help make the CAFE goals if those cars do not have the characteristics they crave? It is as pointless as penalizing a school for the kids choosing vegies over candy at lunch when the school is forced to present the candy right next to the vegies. If I want room and power in an era of still cheap gas, why would I even think of buying a golf cart or paying an extra 50K?

    The response is that if gasoline was made more expensive consumers would be up in arms. Well is that not the job of the technocrats to communicate the inherit goodness that would come? Or do they fear that consumers would not buy in? Then the CAFE standards devolve into a stealth operation by the technocrats and pundits to manipulate people because "THEY DO NOT KNOW WHAT IS GOOD FOR THEM". That kind of attitude breeds arrogance and hubris in my opinion. There are plenty of examples in history of well meaning tyrants believing they knew better.

    As awful as the Democratic process is, it is preferable for us to have the freedom to be stupid then for us to be in the thrall to a benevolent and ultimately wise dictator. What happens when that great individual is replaced by a lesser person? Then the empire crumbles.

  • Report this Comment On November 09, 2012, at 3:55 PM, rhutmacher wrote:

    @TMFMarlowe

    Not all of those profits made overseas come back to the US. Ford may very well use those profits in China, Brazil, and wherever else to invest in those markets because of repatriation taxes. I don't know about repatriation taxes in other countries, but that could also be a big factor in why foreign companies continue to reinvest their profits here.

  • Report this Comment On November 12, 2012, at 11:50 AM, vitom999 wrote:

    The article perpetuates myths instead of illuminating them. Your key source,cars.com and their American content index, works off of a very narrow perspective on the extent to which a particular car contributes to the American economy. They only consider parts manufacturing and final assembly, ignoring equally important aspects such as engineering, dvelopment, and investment criteria. IN FACT, a Ford car assembled in Mexico contributes more to the American economy than a Toyota assembled in Tennesee.

    It is disappointing that Motley Fool is starting to expound political views instead of sticking to financial reporting; why is this happening? I probably need to move on.

  • Report this Comment On November 18, 2012, at 2:53 PM, mickeyz56 wrote:

    Unfortuneately many foreign car companys ship parts to a US warehouse and repackage them or put part A into part B in line side containers. This process "transforms" them to US made.

  • Report this Comment On November 18, 2012, at 3:15 PM, EvanBuck wrote:

    Nice write-up. It was so interesting listening to politicians bloviate about "shipping jobs overseas" when the definition of what a "shipped job" was was very relative, and the logic was just not necessarily there (correlation does not = causation).

  • Report this Comment On November 21, 2012, at 10:43 PM, msgbent wrote:

    Great discussion. The contentious Myth 1: Buying "American" cars begs the question - Why are we $ focused Fools so concerned and how would we measure “American made”? Why, because the US automotive sector contributes enormously to the US economy. And in return, the US economy contributes enormously to the financial health of the automotive sector. A symbiotic relationship but one that has grown a parasitic wart. “The relationship between the U.S. GDP growth and the vehicle sales growth rate … were once statistically correlated to a degree that one could almost predict the GDP growth using vehicle sales growth. However, the close relationship between GDP and vehicle sales seems to have been broken in 2010. Double-digit growth in U.S. vehicle sales in 2010, 2011, and 2012 YTD was accompanied by GDP growth rates of 3 percent or lower. Based on historical trends, the GDP growth rate for the past three years should have been 4 percent or higher given recent growth in vehicle sales.” http://www.cargroup.org/assets/files/newsletters/2012q4carne... See, while the US economy contributes to the global automotive industry, only the US automotive sector sustainably contributes to the economic fabric of the US. Though arrogant, legacy GM was right, but should have recognized “What's good for America is what's good for GM” – the new GM gets it.

    Q for mickeyz56 and vitom999 – what are your data sources?

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