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back to index backAMERItalk October,  2005


'Foreign' cars rolling out of U.S. factories

Next time you see a new foreign-brand automobile, odds are it was made in America.

Toyota, Honda, Subaru, BMW, Mercedes-Benz, Hyundai and others - more than 40 models of foreign cars, minivans, SUVs and pickup trucks - are rolling off assembly lines at 15 plants in the United States so rapidly that last year brought a tipping point.

For the first time, more foreign-brand vehicles sold in the United States were built here - 3.7 million - than were imported - 3.4 million - according to the Center for Automotive Research, non-profit auto-industry analysts in Michigan.

That's a sea change from 20 years ago when 460,000 foreign-brand vehicles were built in the United States while 3.6 million were imported, according to the automotive forecasting wing of J.D. Power and Associates, a California information-service company.

The latest Power projections for 2005 estimate that 4.8 million of the 7.2 million foreign vehicles that will be sold here will be built here.

The evolution reflects automakers' strategy to build plants closer to buyers, the ever-growing popularity of foreign-brand vehicles and the blurring of what "made in America" means.

Is the wildly popular Chrysler 300C a foreign car because Chrysler now is owned by the German company DaimlerChrysler AG? What about a Honda Odyssey minivan, built by American workers and rolling off an assembly line in Lincoln, Ala., or the first big Toyota Tundra pickup to roll out the doors of a new plant in the heart of hard-trucking Texas?

To many people, it doesn't matter. "A brand's a brand, and people don't care where it originated," said Ron Harbour, president of Harbour Consulting, a Troy, Mich., manufacturing and management consulting firm.

"They can't tell you where it was built or even what country it was built in."

Lonnie Miller, director of industry analysis for R.L. Polk & Co., a Michigan auto information and marketing firm, said that a new generation of young buyers, increasing populations of Asian and Hispanic Americans, even increasing numbers of older buyers choose vehicles not based on brand loyalty or national fealty, but on "what car best fits their image, or the car rated most reliable or most fun."

He called the change "a fundamental shift to what the car is offering as opposed to the hood ornament."

The establishment of foreign plants in the United States gives their manufacturers the economic advantages of cutting huge overseas shipping costs and of protecting themselves from fluctuations in currency values.

The bulk of these plants are new, modern and more nimble than Detroit's facilities.

Foreign-owned plants offer the flexibility to build as many as four or five models in the same factory, nearly double that at many American plants. This is a critical advantage in an automotive age where runs of as few as 30,000 of certain models are all that are needed to fill a crucial niche in sales.

What's more, foreign brands use their American presence to persuade even loyalist American-only buyers that the vehicle they are buying is American-made.

Honda, with plants in Ohio and Alabama, is having success selling Americans that "even though it's a foreign brand, it's a domestic vehicle," said Mike Chung, an analyst for the automotive Web site Edmunds.com.

Toyota said one reason it is building its near-billion-dollar pickup plant, capable of producing 200,000 Tundras per year, in San Antonio is that it goes right to the heart of the American vision of trucking: big, wide open, rugged.

"It's the first time we chose a location for marketing reasons," said Dan Sieger, spokesman for Toyota Motors North America. "Texas is the biggest pickup market in the country, probably making it the biggest in the world, and to have a truck built by Texans can only make it better."

The culture change is dramatic. In the 1970s, more than 70 percent of the vehicles sold in the United States were American-made, but by last year domestic sales had fallen, to 58.6 percent.

On the East and West coasts, the split is almost even, according to R.L. Polk. The differences are wider elsewhere. Only the South (60.4 percent domestic) and the Midwest (71.2 percent) are keeping American manufacturers in the lead.

The gap continues to close. Polk's Miller noted that states the U.S. Census Bureau ranks among the fastest growing - Arizona, California, Florida, North Carolina and Texas - are hotbeds of growing populations of young and immigrant buyers who prefer foreign-brand vehicles.

The surge in gasoline prices certainly could close the gap further.

Any significant turn from SUVs and trucks, which burn more gas, easily could nudge Americans to foreign vehicles, which have a better reputation for fuel efficiency and quality.

Source: Boston Globe - GAI


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