For the first time ever, foreign automakers have built more cars in the United States than the Detroit 3 here in America. That’s a big deal. Even if you add in the non-Detroit 3 automakers (Lucid, Tesla, Rivian) you end up with a deficit.
Ford is going in the opposite direction as it has cut back a lot from its original plan to build battery facilities in Michigan and, right on cue, Michigan is cutting back its massive subsidies for the project.
For Toyota, in particular, building cars in the United States has worked out quite well. Toyota is killing it right now, so it’s no surprise its Chairman/outgoing CEO Akio Toyoda got a big fat paycheck. This is also a big deal, mostly because that’s not how Japanese companies usually work.
And, finally, used car values continue to drop like a stone.
International Automakers Have Increased Production 85% In The Last 25 Years
There’s nothing wrong with a few light trade barriers. Fences make good neighbors and all that. Starting in earnest with President Lyndon Johnson, the American government has frequently taken steps to encourage automakers to build cars here in the great United States. Under the Reagan Administration, foreign carmakers were further coaxed into getting their supplier buddies to build plants here as well.
Eventually, foreign automakers decided, hell, if we’re building cars here and getting parts here, you might as well design and engineer some cars here, too.
Some 4.94 million cars were built in the United States of America by international automakers. That’s what we’re calling them, I guess, because the report I’m quoting is from two different organizations (Autos Drive America and American International Auto Dealers Association) that are made up of carmakers and dealers representing non-American brands. They use “foreign” once in scare quotes and international 17o times. But aren’t all carmakers basically international at this point?
Either way, brands that are not traditionally American ones built 4.94 million cars here in 2023, the Detroit Three built 4.60 million cars here, and Lucid/Rivian/Tesla built 754,342 vehicles.
This speaks to the success of foreign automakers and also the success of NAFTA/USMCA in encouraging Stellantis, GM, and Ford to build plants in Mexico and Canada. Perhaps that’s not entirely fair, as Ford builds more cars here in the United States than any other carmaker. Plenty of foreign automakers also build cars in Mexico.
The distribution across America for these “international automakers” is also kind of interesting, as seen in this graphic:
Roll tide!
What you’ll notice about this graphic is that most of these places are in southern states where unionization isn’t a given. That explains the extreme urgency of the United Auto Workers union’s campaign to win union contracts with these automakers. The UAW has been on the decline for years and betting on the Detroit 3 doesn’t make a lot of sense.
It is, as pointed out by a professor in The Detroit News, literally “existential” for them, as their power falls with every closed plant.
Ford Cuts Back Battery Plants In Michigan, Will Lose About $750 Million
The hype around electric cars and the massive success of Tesla, coupled with increasing government requirements, led automakers to announce plans to build a ton of factories to create batteries, motors, and all the things you need to make the damn things.
And then EV car sales started to slow down, and carmakers started reconsidering some of those plans, including Ford, which massively scaled down plans in Michigan.
“We want people to trust us, we need people to trust us. We try to bring all the information we can forward to the (Michigan Strategic Fund) board,” Christin Armstrong, a senior vice president with the Michigan Economic Development Corp., said in an interview on Monday.
“We come with good intentions … what we are presenting to the board is the best project we can put together based on on the info and circumstances and conditions in that moment.”
The state and Ford agreed Tuesday to substantially cut a proposed $825 million in tax credits for an immense new EV battery factory planned for outside Marshall, reducing that to just shy of $225 million. They’re also slashing $69 million from a public grant for the project.
This is a little awkward because the Biden Administration and Governor Gretchen Whitmer made a big deal of this move. Better to reassess and cut back than just build these things and realize they’re not yet needed, I guess.
Akio Toyoda Gets $10 Million, Or About A Fourth Of What Carlos Tavares Got Last Year
The super disproportionate executive salary isn’t something that Japanese companies are hugely keen on and, in fact, the last time the CEO of a Japanese automaker tried to get a pay bump, well, it ended with him having to sneak out of the country in a box.
Ghosn merely got $6 million, so Akio Toyoda netting a $10 million payday is quite the jump, as Automotive News reports. OF course, this is happening because Toyota has become the most profitable company in Japanese history.
This whole thing is part of a larger trend of Japanese companies adopting more European/American-style corporate practices. See, also: the decrease in cross-held shares.
Japan still has a way to go, however, before it’s at the same level as American automakers re: executive salaries. To put this into context, last year Mary Barra pulled in about $28 million and Carlos Tavares made $39.5 million.
Used Car Prices Drop For 22nd Straight Month
The pandemic and related supply shortage led to an extreme lack of new cars, which inevitably led to a huge run on used cars. It didn’t hurt that interest rates were super low so people could finance used car purchases with relatively low monthly payments.
As you can see in the graph above from Manheim, the used vehicle value index shows wholesale rates continue to fall. From Manheim:
“Wholesale value declines have been stronger than we normally see for much of the last two months,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. “However, even though much of the industry was feeling the retail sales disruptions caused by the CDK outages in the latter part of the month, Manheim started to see wholesale price declines decelerate, ending the month at a seasonally normal pace. Sales conversion is currently running several points above the previous three years, including 2021, indicating that buyer demand is relatively strong despite all the uncertainty in the market.”
In June, Manheim Market Report (MMR) values saw weekly decreases above long-term average declines, with the first half of the month showing stronger depreciation while the last week slowed noticeably. Over the last four weeks, the Three-Year-Old Index decreased an aggregate of 1.5%, including a decline of only 0.2% in the last week of the month. Those same four weeks delivered an average decrease of 0.5% between 2014 and 2019, showing that depreciation trends are currently running higher than long-term averages for the year.
I’m glad I sold the Subaru, which… I owe you all updates on that. They’re coming, I promise.
What I’m Listening To While Writing TMD
I have a theory that the right amount of famous for me is, actually, not that famous. Would I like to be Andy Willman, the mega Top Gear/Grand Tour producer? Maybe. That’s pretty close. Pharrell Williams is way too famous. That dude can’t go to Harris Teeter and buy corn. That’s all I’m saying. People will bother him while trying to buy corn. You know who can buy any kind of cereal or grain he wants? Chad Hugo. He is the guy in producing group The Neptunes who is not Pharell Williams. He’s in the videos! He gets the awards and the credit! He gets to hang out with Pusha T and make songs like “Mr. Me Too” for Clipse. Buys corn whenever and wherever he wants. Chad Hugo. That’s the dream.
The Big Question
Do you know (or care) where your car was built?
I’ve always known where they were built- for years have mostly had Hondas…as far as caring? No thanks to cars made in China
Bremen, Germany
My earlier vehicles were built in:
Goteborg, Sweden (two of these. Mom had 2 cars from there too – and my parents visited the factory on a vacation several years ago.)
Hermosillo, Mexico
Sayama, Japan
then Louisville, Kentucky
My main car was built in Elizabeth, South Australia, Australia
My camping car was built in Sakahogi, Gifu, Japan.
A Canadian Honda, a Canadian Toyota and an Alabama Toyota.
The Canadians were bought used so it’s not like my money was supporting the Canadian economy or Toyota or Honda corporate. I didn’t know my new car purchase was built in Alabama until after the fact and that knowledge wouldn’t have affected the purchase one way or another.
So if we read between the lines, Unions are to blame that the 3 American automakers are marking less cars is the US than others.
My 2024 Kia ev6 and my 2022 LS mt125 tractor are both made in South Korea. My 2014 pathfinder is made in USA.
Aside from the “where” a car was built, I think the “when” matters as well. global manufacturing got its marbles knocked all over the place in 2020. to some degree, we’re still seeing the manufacturing effects of that.
But, we are also seeing the development effects of remote work for 2+ years and sliding standards in order to get product out the door. vehicles are making it to market 3/4 baked effectively.
It may be a while before design & build quality comes back globally.
that being said…
’67 Toledo, OH
’95 Yoshiwara, Japan
’22 Baja California, MX
the nerdy game could be: guess where people’s cars were made based on build location!
First time I REALLY started to care where a car was made was when I noticed how much better the Japan-made version of my 2006 Indiana-made Outback was. A friend in Europe owned basically the same car, albeit a 2.0 engine vs my 2.5 and after riding in his I couldn’t get over how the US version felt -and was- a cheap knock-off essentially.
But more than where, I think it’s by whom and under what quality premise. A contemporary Cadillac in my opinion is no worse than premium German brands, at comparable trim levels. There are plenty crappy cars made across Europe and China, and plenty really good ones too.
I have a feeling the Cadillac might be better built on average than most German offerings, plus theCadillac will be more easily repaired and for half the price.
“Do you know (or care) where your car was built?”
Yes and yes. Ohio and Hiroshima. And, yes I DID run a Geiger counter over the latter and no it didn’t click any more than background.
“Better to reassess and cut back than just build these things and realize they’re not yet needed, I guess.”
But they are needed. Big batteries are useful for more than just cars. Powerwalls, especially high capacity commercial use, renewable grid storage, electric trains, some electric aircraft, etc.
Growing up, I had a dad who worked for GM, and I wouldn’t have dreamed of even riding in a foreign car, let alone owning one- that extended to marque, regardless of actual origin. Now I’ve had two Hondas from Japan to add to my history of Chevys and Plymouths, and I currently drive a Toyota from Alabama. I just gravitated towards the cars that seem to hold up better. I remember my dad, who worked in a plant making drive axles, telling me how parts they made (in partnership) for Toyota were held to higher tolerances than those for GM. That stuck with me for some reason. When it comes down to it, one faceless international corporation is no better than another due solely to where it’s headquarters is based (with obvious exceptions for nations with possible nefarious motives). The only regret that I have over purchasing my Alabama ‘yota is that I’m a believer in the positive role of labor unions, and I’d rather the workers there were unionized. But that, as we’re seeing with VW, can change.
South Korea ionic
Wolfsburg Germany VW Cabriolet
Japan. Lexus 300RX
Japan Honda Del Sol
Currently lusting after that Amazon Volvo Wagon. So maybe Sweden since I sold the Saab
I know which factories my cars are built.
Let’s see:
Belgium
Belgium
Belgium
Belgium
Belgium
You can guess what I drive.
So all your cars are made of chocolate?
Volvos? A second-gen Ford Galaxy? A Gillet Vertigo for some reason?
At one point I preferred that my cars were built in Japan by a Japanese company. I still prefer Japanese companies, but they can be built anywhere.
My experience with Japanese car company vehicles built over the last 15 years in the US ranges from average modern US build quality (sans Ford) to as good as from Japan back at the pinnacle of JP quality. Honda definitely slipped in the 2010s.
Current Tesla was built in California. The RAV4 in Canada. My now-sold Cruze was built in Ohio.
Speaking of selling, I sold my 250k mile Cruze quickly. Like under 12 hours. I detailed it inside and out, took good photos, was honest and was open to a lower than listed offer. The buyer got a well maintained car and I got more than I wanted.
My Honda Civic was built in Swindon, UK.
Our Kia Soul+ was proudly made in South Korea.
Arlov, Sweden (Saab 900), Lincoln, AL (Honda Odyssey), Spring Hill, TN (GMC Acadia). My preference is that it’s built in the US by a union. I have one like that (GMC), with the other two fulfilling at least one of those criteria being union made (Saab) and the other built in the US (Honda).
Current 2003 car was built in Canada.
Came with mandatory daytime running headlights and automatic dark-sensitive all lights — turns on headlights and taillights regardless of the position of the light switch.
When I first got it, people would flash their lights at me in daylight, “hey, your lights are on.”
I only note this because I think this is, or was, required of all Canadian-made/driven cars?
It matters to me where the car was built in the sense of I’d like to be reasonably assured that the humans involved are appropriately compensated adults voluntarily doing the job. But as we know from other news, down the line suppliers may not be subject to appropriate scrutiny.
But one car was built in Ohio (the Honda). The other was built in Australia (GTO).
“Do you know (or care) where your car was built?”
Apparently my Ford C-Max was built in Wayne, Michigan
And my Honda Fit was built in Suzuka, Japan.
Can anyone really say where their car is from given the vast network of suppliers around the globe? There’s a common trope in the Porsche Cayenne community that the 958 was the “last of the German-built Cayennes” and therefore its build-quality is superior to the newer Cayennes (made in Slovakia) and the Touaregs. But that’s really a fallacy. Yes, the sticker on the door says “made in Germany” but the reality is that most of the car was built in Slovakia on the same line as the Touareg and then shipped to Leipzig for final assembly and QC thereby allowing Porsche to state “made in Germany”. So is this car really made in Germany? Not really. Made in Europe maybe.
I’d wager most of these made in USA cars also contain high quantities of internationally sourced parts, as do cars built anywhere. I’ve had VWs made in Mexico but the transmission or engine was sourced from Germany. And I’m sure a lot of my “German” cars have parts sourced from suppliers in Eastern Europe.
This is measurable and often reported on the Monroney Label. It is also something you can look up on Cars.com and with NHTSA. The US Government actually maintains pretty strict criteria for what determines the country of origin for manufactured goods.
Yes, that’s right. But I can guarantee most people don’t bother to consider that information when the label on their door says “made in XYZ location”.