Why Buying a Purely American Vehicle Is Trickier Than It Seems

At one time, it was a given that buying a Ford, General Motors, or Chrysler product meant you were choosing an American-made vehicle, but what's on the grill might surprise you when it comes to finding a vehicle made in America.

Jan 17, 2014 at 7:15PM

Is it possible to buy a car that's not manufactured by one of Detroit's Big Three automakers that's actually built here in the U.S.? If, like me, you want to keep American workers employed and want to buy consumer products built by U.S.-based manufacturers, which car should you choose? The answer to that question just might surprise you.

Check your parts and assembly
There is still a stigma in parts of America and elsewhere about owning a non-American vehicle. Some people still look askance if you pull up in anything manufactured by a Japanese carmaker. In reality, the logo on the grill has much less to do with whether the car was actually built in America than it used to.

According to the National Highway Traffic Safety Administration, or NHTSA, there's no such thing as a 100% American-manufactured car anymore. None of the vehicles listed in a recent report garnered a perfect score on parts and assembly.

When Congress passed the American Automobile Labeling Act 20 years ago, the law required all cars to have labels specifying the percentage of U.S. and Canadian parts, where it was assembled, and the country of origin for both the engine and transmission. The NHTSA has been compiling lists of vehicles based on these specs to guide consumers who consider buying a car an act of patriotism.

Rally at GM
For a company that many thought was finished, General Motors (NYSE:GM) has bounced back remarkably since filing for Chapter 11 protection in 2009. It continues to make gains in repairing its brand image. For instance, GM became the first American auto company in history to top the J.D. Power Initial Quality Study with eight individual model awards in 2013 -- five from its Chevrolet brand. Even with a worse than expected December, Cadillac managed to finish the year as the industry's fastest-growing, full-line, luxury brand. GM is now more profitable than it's been in a decade. The company continues remaking its fleet of vehicles as it refreshes, replaces, and redesigns its fleet of vehicles with the goal of completing the makeover by the end of 2016.

According to the company, GM's year-end numbers indicate it delivered 2.8 million vehicles in all of 2013, an 11% increase over 2012′s sales figures. 

Ford makes a comeback
Ford's Ford Motor (NYSE:F) turnaround continues to be a hot story on Wall Street. After its stock price cratered down to an intraday low of $1.01 on Nov. 20, 2008, the company, under the able leadership of CEO Alan Mulally, has regained its former luster as an investment and the company is on stable financial footing again. Ford's stock price closed out the first week of 2014 at $15.51.

Detroit News reporter, Bryce G. Hoffman, writes in his well-researched and readable book, "American Icon" that unlike his predecessors at Ford, Mulally is "approachable, disarmingly down-to-earth and engaging." These virtues were part of the reason that he was able to coax the auto maker back from the cliff it was ready to launch itself over during the Great Recession of 2008-2009.

More important, Mulally also instituted a significant scaling back of its portfolio of automotive brands, like reducing its stake in Mazda and selling the Volvo brand. The focus has been on its core of Ford and Lincoln brands. As a result, estimates for 2013 have Ford's share price trading at just 9.7 times earnings. Earnings are expected to shrink a slightly in 2014 to $1.52 and then rebound to $2.08 per share in 2015.

Ford is still the leader when it comes to trucks. The most popular vehicle in America, the Ford F-150 pickup has been the choice of rugged Americans since 1948. However, the F-150 has the same amount of American parts and production as the San Antonio-built Toyota (NYSE:TM) Tundra, both acquiring 75% of their materials from U.S.-based parts manufacturers.

If Ford (or GM) isn't an automatic first or second on the list of American-made cars, then who is? The answer might surprise you. 

America's brand is...
Toyota's popular Camry again is listed as one of the top sedans by US News and World Report, which aggregates information from other top auto rating sites like Edmunds, Kelly Blue Book, and Autotrader.com among others. The Camry is assembled in Houston and 72% of its parts are certified as being from the U.S.

Toyota is also the most "American" manufacturer of the vehicle of choice for families, the minivan. Toyota's Sienna minivan now rules the market, which during the mid-1990s, was owned by Chrysler. Ironically, Toyota builds its minivan in Princeton, Ind., while both Chrysler's Caravan and Dodge's Town and Country are assembled in Canada.

So, when it comes to buying a truly American-made car, you can't go wrong with Ford or even GM, but the perceptions appear to have been flipped just a bit. Driving a Toyota is now almost as American as baseball, apple pie, and having a Ford (or a Chevrolet) parked in the driveway.

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Fool contributor Jim Baumer has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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