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Car buyers interested in giving the domestic automakers and by extension, the American economy, a lift can do so with their next vehicle purchase.
updated 7/2/2008 10:36:42 AM ET 2008-07-02T14:36:42

American automakers are struggling.

Sales of consumer-oriented cars and trucks at General Motors slid 15.9 January through May compared to the same period last year. Ford and Chrysler are seeing similar troubles with declines during the first five months of 11.2 percent and 19.3 percent, respectively.

Car buyers interested in giving the domestic automakers and by extension, the American economy, a lift can do so with their next vehicle purchase. The challenge is that neither the government nor auto manufacturers make it easy to figure out which vehicles have the greatest impact on the American economy.

Here's the bottom line: The best way to boost the economy with your next new-car purchase is to buy a domestic-branded model manufactured in North America with the highest percentage of American-made parts. But figuring out exactly which models fit that criteria isn't easy.

Automakers must specify on each vehicle’s window sticker how much of its content comes from American or Canadian suppliers, where its engine and transmission were built, and its final assembly point.

The stickers divulge some surprising — and potentially bewildering — information.

For instance, the Chevrolet Equinox, which is assembled in Ontario, has an engine made in China and a transmission from Japan, which brings its domestic content down to 55 percent. The Chrysler PT Cruiser is assembled in Mexico, has a Mexican-made engine and only 37 percent domestic content.

Yet the Japanese-branded Toyota Sienna minivan, with a West Virginia-built engine and transmission, and a final assembly in Indiana, boasts 85 percent domestic content.

The international patchwork of auto parts is nothing new, says Paul Ryan, director of government affairs for the Association of International Automobile Manufacturers (AIAM). The group represents 14 foreign-based automakers and four parts suppliers.

“The industry is the poster child of the global economy, and it has been for many years,” he says.

To help patriotic car buyers hone in on the best domestic models that will have the most impact on the United States economy, we’ve compiled a list of vehicles from American automakers assembled in North America with the highest percentage of domestic parts. Read on to find out why domestic-branded vehicles with the most domestic-sourced parts are best for the economy, or skip the discussion and see the full list of the Most Patriotic Vehicles in the slideshow.

The list includes our best picks per category, including sedan, coupe, convertible and so on. We used safety ratings, fuel economy and cumulative analysis from test drives to break ties and have listed runners-up for each category.

Despite the hodgepodge of parts in most vehicles, experts say there are compelling reasons to buy from American brands, regardless of whether a particular vehicle was born on American soil.

John Wolkonowicz, senior automotive analyst for Global Insight, says to simply consider one question: Where does the profit of the car purchase accrue?

“You buy a Toyota and the profit accrues in Tokyo,” he says. “You buy a GM made in Canada and the profit still accrues in Detroit. Buyers of foreign-branded cars take delight in knowing that their cars are assembled in the U.S. But the value added in the assembly process is not all that great. At the end of the day, it’s where the profits accrue that really matters.”

Another way to look at economic impact is in terms of the number of jobs an automaker creates. As foreign car manufacturers expand operations in the United States and employ more Americans, the lines start to blur. But ultimately it’s still the domestic brands that create the most jobs for Americans.

“A Ford Fusion built in Mexico supports all the same jobs in Dearborn, Mich., that a car built in the U.S. does,” says James Doyle, president of the Level Field Institute, a group that represents the interests of the so-called “Big Three” American automakers — Chrysler, Ford and General Motors — along with their domestic suppliers and dealers.

GM alone employs more Americans than all foreign automakers combined; 40 percent of GM’s worldwide workforce is in the United States, compared to only 11 percent of Toyota’s.

Chrysler employs about 83 workers for every 2,500 vehicles sold, Ford employs 80 and General Motors 71, according to the Washington-based Level Field Institute. By comparison, Toyota employs 33 American workers for every 2,500 cars sold.

Buying a vehicle with the highest percentage of domestic parts possible helps the U.S. economy by invigorating the national auto parts industry, which provides 1.8 million jobs domestically.

Automakers based in the United States still overwhelmingly use American parts. According to the Level Field Institute, 79 percent of parts used in all vehicles produced by domestic automakers are American, while only 35 percent of parts in vehicles from foreign automakers come from North America.

But not everyone appreciates the domestic content figures. “It’s a fundamentally flawed formula,” says AIAM’s Ryan, who calls the rules, governed by the National Highway Traffic Safety Administration, “archaic and misleading.” He contends that they allow the same part from the same supplier company to be called domestic content in one car and foreign content in another.

If a supplier produces a car battery in the United States that is made of 70 percent domestic content, when that battery is installed in a U.S.-built, domestic-brand vehicle, it is considered 100-percent domestic content, says AIAM spokesperson Kim Custer. But if that exact battery is installed in a U.S.-built import-brand vehicle, it is considered only 70-percent domestic content.

In defense of the foreign automakers it represents, AIAM says its member companies do their part to support the American economy: They bought almost $53 billion in parts and materials from the United States in 2006. And more than half of the vehicles sold by those foreign automakers in the United States were built here too.

AIAM also cites the fact that several states, especially in the Southeast, have become hotbeds of manufacturing for foreign nameplates: In Kentucky, Toyota assembly facilities have created about 6,900 jobs. Toyota and the parts suppliers it contracts with collectively have brought $5.9 billion of investment revenue to the state.

Fuel economy has jumped from eighth in 2003 to first in 2007 among factors that most influence new-car purchases, according to research firm J.D. Power and Associates. And the ratio of people who claim fuel economy is an influential factor in their decision rose from 8 percent to 34 percent during that same period.

American automakers face a significant hurdle in these times of high gas prices because of what industry analysts cite as a common misconception: that Asian vehicles are more fuel-efficient than domestic-brand equivalents.

J.D. Power’s 2007 Avoider Study, which polled more than 35,000 respondents who registered a new car in May 2007 about the reasons they passed up certain vehicles and brands, indicated that 20 percent of respondents avoided domestic models because of gas mileage, while only 7 percent of domestic buyers said they avoided a rival import model for that reason.

And by some measures, those perceptions aren't far from reality: According to the federal government's Corporate Average Fuel Economy standards, which rate manufacturers on the collective fuel efficiency of their vehicle line-ups, the Big Three trail Japanese automakers (Honda, Nissan and Toyota, in particular). But it's hard to use any one measure to compare manufacturers' aggregate fuel economy because, for instance, domestic automakers' ratings are skewed by the large numbers of full-size trucks they sell.

There’s also a pronounced regional difference in whether buyers prefer domestic or foreign nameplates. “People on the coasts tend to favor imports, while those in the heartland tend to favor domestics more,” says Jon Osborn, research director at J.D. Power and Associates.

Quality and reliability are other reasons buyers favor import brands, according to J.D. Power research. “Domestics have certainly caught up, but there still is a lag in the quality perception,” Osborn says.

But American automakers have made strides in recent years. “The domestics have, somewhat, closed the gap,” says Jon Linkov, the managing editor of the autos division at Consumer Reports. Reliability of American cars has been on the upswing in recent years, he says. Ford is doing the best, with 41 out of its 44 current models maintaining average or better-than-average reliability records, according to Consumer Reports data.

But misconceptions die hard and don’t bode well for the domestic auto industry, Wolkonowicz says. Repeat Japanese car buyers — many of them Baby Boomers — will insist that domestics haven’t changed, he says.

While Boomers might be a lost cause, younger generations might not be. “Gen Y is blind to national origin ... it simply doesn’t matter,” Wolkonowicz says.

Ironically, he says, that’s a good thing: “The savior of the domestic companies could be Gen Y.”

Helpful Hint:The window sticker on a new vehicle indicates its final assembly point, but you can also verify that it is U.S.-made by looking at the vehicle identification number (VIN) at the base of the windshield. If the number starts with one or five, it was built in the United States. Vehicles assembled in Canada have a VIN beginning with two, and those made in Mexico begin with three.

© 2008


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