Do you really drive an American car?
We take a look at what it means to be "foreign" or "domestic" in today's economy
Foreign or domestic: While the "American" Lincoln MKZ's engine and transmission are made here in the U.S., only 20 per cent of its components come from the U.S. and Canada. Plus, final assembly happens in Mexico.
Sean McAlinden wasn't allowed to drive his Lincoln MKZ onto the parking lot at the United Auto Workers' Detroit headquarters during a recent visit. Why? It was assembled in Hermosillo, Mexico.
What most people see as "American" cars, the UAW does not. It bans Hondas, Toyotas, Volkswagens and all other foreign-branded cars from union property, as well as those cars from Detroit's Big Three automakers for which final assembly occurs outside U.S. borders, such as the Lincoln MKZ, even if those vehicles have bits and pieces built in the U.S. For instance, the MKZ's engine is built in Lima, Ohio, and its transmission is made in Livonia, Mich. Yet, by UAW definition, it is a foreign automobile.
It comes down to the car's vehicle identification number. "The only cars that you can actually park in their parking lots have to have a VIN number starting with a one or two," says McAlinden, executive vice president of research and chief economist at the Center for Automotive Research, and a former UAW worker. "They look at it from the guard shack."
VINs that start with one indicate the car was assembled in the U.S., two indicates Canada, three Mexico, and four anywhere else in the world. A vehicle's VIN is at the base of the windshield on the driver's side, as well as other places on the vehicle.
Most consumers aren't nearly as concerned with where their car is built as UAW members are. But the reality is that millions of Americans' livelihoods, not to mention a large part of the American economy, depend on the domestic auto industry. And as Chrysler, Ford and General Motors launch their biggest product offensives in decades, the questions of whether to "buy American" and what exactly that means in the new global economy are thrust into the public view.
What does "Made in America" mean?
Only 21 per cent of the Buick Regal is made here or by our neighbors to the north. It’s currently also not assembled in North America, though, that’s changing in the near future, when assembly will occur in Oshawa, Ont.
As far as the federal government is concerned, the National Highway Traffic Safety Administration is the final arbiter on what constitutes "foreign" and "domestic." Since 1994, the American Automobile Labeling Act (AALA), under NHTSA's purview, has required that every new vehicle for sale in the U.S. include on its window sticker the location of final assembly, the per cent of domestic content and where the engine and transmission were built. A full list of these data for every model sold in the U.S. is available on NHTSA's website.
It gets confusing, though. The AALA does not account for labour costs in the final assembly, has convoluted formulas for determining the place of origin for parts, and considers Canadian content as domestic. "Ontario is kind of like the 51st state when it comes to the auto industry," Honda spokesman Edward Miller says.
Flawed as they are, the AALA data illustrate how blurred the line between domestic and foreign has become, as American automakers increasingly use foreign parts and as foreign automakers source more content from the U.S.
Take the new Buick Regal, for example. According to AALA data, it has only 21 per cent U.S./Canadian content and is assembled in Russelsheim, Germany. Meanwhile, the Honda Accord has 80 per cent U.S./Canadian content and is assembled in Lincoln, Ala.
Approximately 80 per cent of the "Japanese" Honda Accord's components are made here in the land of the free or by our Canadian neighbours. The Accord is actually built in either Lincoln, Ala. or Marysville, Ohio.
The AALA does not actually rule on whether these or any other cars are foreign or domestic. It simply offers information on the location of assembly and parts content, and lets consumers draw their own conclusions. What this means is that even the federal government has opted out of defining what "Made in America" really means.
There are other government policies - the North American Free Trade Agreement and the Environmental Protection Agency's corporate average fuel-economy regulations, for instance - that do put vehicles into foreign and domestic categories. However, their purpose is to set trade tariffs and fuel-economy standards for car companies, not to inform consumers. Their standards and data aren't readily available to the public, and industry insiders consider them to be even more convoluted than those of the AALA.