Defining an American Car
How do automakers define an American car in today's global market?
Jeep's heritage dates back to World War II, when it transported American troops in all sorts of terrain. Today's Wrangler Rubicon remains a vehicle with high domestic content—83 percent of its parts are from the U.S. or Canada.
The proof is there in the federal government-mandated content labels affixed to the VUEs' windows.
Keith Chartrau, launch planner for VUE, said the so-called domestic content label on 2004 VUEs with Honda's 3.5-liter V6 will show "an increase" in domestic content, because the Honda-supplied engine is built in Ohio. Final, exact percentages on the 2004 VUE's content were still being worked up, he added.
Previous six-cylinder VUEs had an engine that came from and was built by GM of Europe, which did not count as domestic content because the engines were manufactured overseas and shipped to the VUE's assembly plant in Tennessee. Note, though, that Saturn's parent company—GM—is headquartered in Detroit, and Saturn was designed at GM's studios in the Detroit area.
Welcome to the weird world of automotive lineage. Tracking the content of vehicles today is a mind-numbing experience, even for folks in the auto industry.
With each car having as many as 20,000 parts, it's easy to see why automakers maintain staffs just to certify and analyze the content of each model and provide information for government-mandated labels.
Still, the required labels found on new cars and trucks that are meant to detail "domestic content" don't provide a full picture.
How We Got Here
The domestic content labels were mandated after the U.S. Congress, at the urging of the United Auto Workers union and Detroit's Big Three, passed the American Automobile Labeling Act (AALA) of 1992.
It required automakers to formulate and post on every new model the origin of the vehicle's parts and the vehicle's assembly site.
The AALA took effect with vehicles manufactured after Oct. 1, 1994.
But auto industry trends have sort of swamped the intent of the law. For one thing, the auto industry has been consolidating, with larger automakers buying into or buying altogether other car companies.
For example, Chrysler vehicles today are products of Germany-based DaimlerChrysler, and Ford Motor Co.'s portfolio of vehicles includes English-built Jaguars and Land Rovers as well as Swedish-built Volvos.
Add in the nonstop pressure on automakers to source parts globally as inexpensively and as efficiently as possible, and you can begin to see the complications inherent in any domestic content labeling.
In addition, the domestic content requirement, as it now stands, mixes U.S. and Canadian parts into a single percentage, so there's no real way to know the U.S.-only content.
Even this percentage doesn't take into account where the vehicle is ultimately assembled. This information is available on another line in the domestic content label.
Examples Easy to Find
So you think that Volkswagen's New Beetle is a fun reincarnation of the old Beetles of the '60s and '70s?
The styling may be derived from the old cars, but production is strictly modern.
While the original Beetles for U.S. customers came from Germany, every one of the New Beetles for U.S. customers today is built in Mexico. And the New Beetle's 5-speed manual transmission comes from Argentina.
Volkswagen of America spokesman Tony Fouladpour said he has heard anecdotally of some New Beetle buyers being concerned about the car's assembly in Mexico.
"I think dealers are good at dealing with it, telling people we have been producing these vehicles in Mexico (for the Mexican market) since the 1960s," he said. "And the quality there is comparable to what we have in our plants in Germany."
Also built in Mexico is Chrysler's PT Cruiser, whose looks harken back to the American gangster cars of the 1920s and '30s.
In fact, the Toyota Avalon has more domestic content than a PT Cruiser—70 percent vs. the PT Cruiser's 61 percent. The Avalon is built at a factory in Kentucky.
Not Part of Most Buying Decisions
Auto analysts say most car shoppers don't use content information to decide which model to buy.
"Consumer research indicates that for a lot of people [the Buy American issue] really doesn't come up," said George Peterson, president of the automotive research firm, AutoPacific Inc. of Tustin, Calif. "They buy what they want to buy."
Peterson noted it's especially true of younger buyers who don't have the same strong feelings about buying American as do older buyers.
"They're more open," he said, adding that many young people are employed in services, rather than in manufacturing. "As a result, they're not tied to the union jobs of old and don't have the same sensitivities as did earlier generations," Peterson said.
Dan Bonawitz, vice president of corporate planning and logistics at American Honda, also has seen little evidence that the labels impact sales. "Our experience is people don't even pay attention to it," he said.
In fact, an evaluation by the National Highway Traffic Safety Administration in calendar 2001 found just 5 percent of the 645 people surveyed about the domestic content labels said they were influenced by the label to any degree whatsoever.
Even among consumers who described themselves as Buy American advocates, just 20 percent said they knew of the so-called content labels and only 9 percent had read one at a dealership, according to NHTSA.
No Push to Remove Labels
Still, no one seems hell-bent on getting rid of the labels. "That's not even on our radar screens, it's not on our lobbying agenda," said Ellen Dickson, who's the policy public affairs person at Ford Motor Co.
Heidi Blumenthal, director of the legislative affairs for the American International Automobile Dealers Association which represents 5,000 dealers, said while gathering the content information can be costly, it's not a front-burner issue in the auto industry right now.
She said consumers don't care about content anymore because they have seen in recent years how the auto industry has become global.
People are buying international cars now, Blumenthal said, adding "they want to buy the best."
Ann Job is a writer for T&A Ink.
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