Thursday 27 October 2016
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GM, Ford Top Most “Made In America” Vehicles Index

GM, Ford Top Most “Made In America” Vehicles Index

Americans are increasingly rediscovering the importance of buying local, or buying U.S.-made products. For some households, that value system extends to their family vehicle.

Yet it’s not entirely clear what constitutes ‘made in America’ for a car or truck. There is no 100-percent American model on the market; every vehicle has some foreign-made parts.

In fact, there are all sorts of variations. Some models have been engineered in the U.S. and have some homegrown parts, but are assembled overseas, or in Mexico, while other models have final assembly in the U.S. but are made of a surprisingly high percentage of foreign parts.

You can already get an idea of how a vehicle sums up on domestic content with the American Automobile Labeling Act (AALA) requires a window-sticker level on new vehicles, listing the percentage of U.S./Canadian parts content, plus the names (and corresponding percentage) of other countries that contribute more than 15 percent of the content—as well as the final assembly point and the country of origin for the engine and transmission.

However, the AALA figures don’t give you a very good idea of economic impact—one of the main reasons why people buy American. That’s where the so-called Made In America Index, from the Kogod School of Business at the American University, Washington, D.C., comes in.

Associate Professor Frank Dubois, said to be an expert in “global supply chain management,” has rejiggered the priorities to represent those economic effects. His index looks at these items:

• Profit margin (depending on where the headquarters are located)
• Labor (assembly point), research and development
• Inventory, capital, and other expenses (location of assembly)
• Engine and transmission origin (location)
• Body, interior, chassis, electrical, and other (location)

For the latter item, the index uses the current AALA percentage, although here it’s given a strong push up based on the assembly location, R&D activities, and parts and materials sourcing.

“The index reveals that vehicles produced by automakers whose headquarters are located in the U.S. rated higher in overall domestic content because the profit derived from the sale of these vehicles was more likely to return or remain in the U.S,” said the authors of a report explaining the methodology. “We argue that a true index of ‘localness’ must recognize the firm’s country of origin as well as the location of its research and development activities.”

It is not surprising that many vehicles from GM, Ford, and FCA Fiat Chrysler do quite well in this index, and GM took many of the top spots, but the revised way of processing this does knock Toyota, most notably, from some of the top spots.

Not all GM models have a great Made In America percentage, however. The Chevrolet SS and Chevrolet Spark, made in Australia and South Korea, respectively, both achieve only 15.5 in the system—as does the Chevrolet Caprice patrol/fleet car, which is essentially a version of the SS. But as for the Spark EV, it’s worth noting that it does much better—36.5—in the study because of its battery packs are assembled in Michigan.

The Chevrolet City Express, Chevrolet Trax, and Buick Encore—all models are all also low in the ratings, at around 20.

The Tesla Model S, one other model that was designed and conceived in the U.S., and from a domestic automaker, ranks quite a distance down the list, at 75 percent in the index—versus 50 percent in the official AALA.

Photo Credit: GM