The money trail...import vehicle vs domestic.

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Locked
User avatar
TxAg
Posts: 1055
Joined: Sat Oct 17, 2009 11:09 am

The money trail...import vehicle vs domestic.

Post by TxAg » Thu Sep 21, 2017 5:43 pm

I have a coworker who refuses to buy an "import" vehicle. In today's discussion, it was Toyota. Even though Toyota Tundras are made in Texas (San Antonio) and they have a new headquarters in DFW, his reasoning is that the money goes back to Japan and not the US.

I don't think he's correct. I'm perfectly happy buying an import vehicle. We currently own a Subaru.

Can someone help me understand the through and through dynamics of where the money goes.

SimonJester
Posts: 1317
Joined: Tue Aug 16, 2011 12:39 pm

Re: The money trail...import vehicle vs domestic.

Post by SimonJester » Thu Sep 21, 2017 6:22 pm

Here is a good article on the subject:

https://www.edmunds.com/car-buying/fore ... ey-go.html
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

iamlucky13
Posts: 655
Joined: Sat Mar 04, 2017 5:28 pm

Re: The money trail...import vehicle vs domestic.

Post by iamlucky13 » Thu Sep 21, 2017 7:23 pm

I presume the profit goes back to Japan, as does the money for parts produced in Japan and shipped to the US for assembly. The pay for assembly labor, and any parts produced in the US stays in the US.

That seems to be in line with what the Edmunds article is saying.

The "Kogod Made in America Index" linked in that article is not loading for me, but I think I found the same thing here:
http://www.american.edu/kogod/research/ ... /index.cfm

They don't seem to clearly explain, but it appears the TDC (total domestic content?) column is basically their score?

In that case, the first foreign car on the list, the Honda CR-V in 9th place at 78.8% TDC is not far behind the absolute leader - the Chevy Traverse at 85.5%, and well above some of the lowest TDC "American" cars like the Jeep Renegade at 38%.

Jack FFR1846
Posts: 5738
Joined: Tue Dec 31, 2013 7:05 am

Re: The money trail...import vehicle vs domestic.

Post by Jack FFR1846 » Thu Sep 21, 2017 7:51 pm

My mom is the same way and will only buy "American" cars. She presently owns a Ford Fusion that was built in Mexico.

I saw a list recently with US content for every car model sold in the US. The highest % surprised me. It was one of the Toyota models (I don't remember which). I had thought my Toledo Ohio built Wrangler would have had more, but it doesn't.

I suppose profit goes somewhere, but since every car company I know of is public, wouldn't that go to share holders as dividends? Would we need to know where all the share holders lived to use that logic.
Bogle: Smart Beta is stupid

User avatar
yatesd
Posts: 487
Joined: Sun Nov 03, 2013 8:19 am
Location: MD

Re: The money trail...import vehicle vs domestic.

Post by yatesd » Thu Sep 21, 2017 8:11 pm

I think it is important for everyone to have a good understanding of where they spend their money and the potential implications so personal decisions can be made. I've worked for 3 different Japanese companies and 1 Dutch company in a different industry so I have a reasonable understanding of the concept.

Ultimately, I make my own purchasing decisions based on what is best for my family (overall value). However, at least 10% of my decision is based on where my hard earned money is going. My matrix from best to worse:

- American Owned, American made: US gets the taxes, US gets the jobs

- American Owned, Foreign made: US gets the taxes, retains control of company, controls suppliers, etc.

- American Ally Owned, US made: US Ally, American Jobs

- American Ally Owned, Foreign made: At least I am enriching a favored nation

- Indifferent Country

- Potential long-term concern: ex: China, Russia, etc.

One other related thought...again trying to answer the OP. I'd rather see a US owned company (GM, Walmart, Amazon) use manufactured goods in China if it helps them better compete on a global scale (Allibaba, Carrefour, VW, etc.)

User avatar
yatesd
Posts: 487
Joined: Sun Nov 03, 2013 8:19 am
Location: MD

Re: The money trail...import vehicle vs domestic.

Post by yatesd » Thu Sep 21, 2017 8:14 pm

Jack FFR1846 wrote:
Thu Sep 21, 2017 7:51 pm
My mom is the same way and will only buy "American" cars. She presently owns a Ford Fusion that was built in Mexico.

I saw a list recently with US content for every car model sold in the US. The highest % surprised me. It was one of the Toyota models (I don't remember which). I had thought my Toledo Ohio built Wrangler would have had more, but it doesn't.

I suppose profit goes somewhere, but since every car company I know of is public, wouldn't that go to share holders as dividends? Would we need to know where all the share holders lived to use that logic.
Yes, your Jeep is owned by the Italians. No longer the Big 3, just the Big 2. China owns Volvo, and is also trying to buy Jeep.

https://www.nytimes.com/2017/08/21/busi ... ml?mcubz=3

User avatar
ClevrChico
Posts: 1007
Joined: Tue Apr 03, 2012 8:24 pm

Re: The money trail...import vehicle vs domestic.

Post by ClevrChico » Thu Sep 21, 2017 8:23 pm

The #10 holding of VTIAX is Toyota. The profits from the Tundra aren't necessarily staying in a foreign country. :-)

User avatar
Kenkat
Posts: 3786
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: The money trail...import vehicle vs domestic.

Post by Kenkat » Thu Sep 21, 2017 8:33 pm

I just gave up on the whole thing since I own two Chevrolets made in Ontario, Canada, a Toyota made in Kentucky, USA and a Honda made in Alabama, USA.

AlohaJoe
Posts: 2548
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: The money trail...import vehicle vs domestic.

Post by AlohaJoe » Thu Sep 21, 2017 8:37 pm

yatesd wrote:
Thu Sep 21, 2017 8:11 pm
- American Owned, American made: US gets the taxes, US gets the jobs
Ford just said that its corporate tax rate as of July was only 10% due to using foreign tax credits. That is, some other country got the taxes and the US didn't.

I would have thought that with all the constant news over the past decade about "Double Irish with a Dutch Sandwich", Australia's new "Diverted Profits Tax", Apple issuing US bonds (and thus being able to take tax deductions on the interest paid) while having $240 billion in cash overseas ... and many, many more examples ... people would have realised that modern corporate finance is no longer described in simple terms or comprehended by mere mortals.

User avatar
bottlecap
Posts: 4954
Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: The money trail...import vehicle vs domestic.

Post by bottlecap » Thu Sep 21, 2017 9:09 pm

Who cares where the money goes? If you pay a bunch of fools to make you a crappy car because they live in your town, state, or country, what incentive is there for them to stop being fools and make a better product? Your giving them a subsidy, not your business. Any one who thinks that's good for America failed economics.

Your co-worker doesn't know how economics or business works, so why try reasoning with him?

And we only own domestic currently. But I'd consider all makes and models.

JT

Runner01
Posts: 267
Joined: Thu Dec 12, 2013 7:14 pm

Re: The money trail...import vehicle vs domestic.

Post by Runner01 » Thu Sep 21, 2017 9:35 pm

yatesd wrote:
Thu Sep 21, 2017 8:11 pm
I think it is important for everyone to have a good understanding of where they spend their money and the potential implications so personal decisions can be made. I've worked for 3 different Japanese companies and 1 Dutch company in a different industry so I have a reasonable understanding of the concept.

Ultimately, I make my own purchasing decisions based on what is best for my family (overall value). However, at least 10% of my decision is based on where my hard earned money is going. My matrix from best to worse:

- American Owned, American made: US gets the taxes, US gets the jobs

- American Owned, Foreign made: US gets the taxes, retains control of company, controls suppliers, etc.

- American Ally Owned, US made: US Ally, American Jobs

- American Ally Owned, Foreign made: At least I am enriching a favored nation

- Indifferent Country

- Potential long-term concern: ex: China, Russia, etc.

One other related thought...again trying to answer the OP. I'd rather see a US owned company (GM, Walmart, Amazon) use manufactured goods in China if it helps them better compete on a global scale (Allibaba, Carrefour, VW, etc.)
Foreign companies do pay taxes on profits earned from business conducted in the U.S. (generally speaking). Many car companies also operate wholly owned U.S. based subsidiaries that absolutely fall under US taxation.

User avatar
Pranav
Posts: 186
Joined: Thu Aug 25, 2016 11:25 am
Location: Austin, Texas, United States

Re: The money trail...import vehicle vs domestic.

Post by Pranav » Thu Sep 21, 2017 11:54 pm

I faintly recall Neil deGrasse Tyson saying something along the lines of - we shall buy best cars regardless of the country, so that American companies shall seek to make best car.
Pranav

nickjoy
Posts: 47
Joined: Tue Jun 06, 2017 9:44 am

Re: The money trail...import vehicle vs domestic.

Post by nickjoy » Fri Sep 22, 2017 11:37 am

I always thought a big part of capitalism was to buy a high enough quality product at the cheapest price.

Granted, there are caveats to this. I won't buy anything from North Korea.

But, I don't see why consumers need to hobble themselves to a small pool of manufacturers when there are better and cheaper products out there. Let the free market reign in overpriced bad product. Not saying Ford is worse, or Toyota is better, but get the product you want regardless of country of origin. When foreign automakers got into the US market in the 70s/80s they quickly got the US manufacturers to increase their quality or go out of business. I'm sure a lot of people older than me remember the cars in the 70s and 60s would rust through in about 6 years.

I do know that the Ford Transit connects are made overseas as passenger vehicles, shipped into Baltimore, and then have the internal seats and upholstery shredded so they can then rebrand them as light trucks or light duty commercial vehicles. All of this to avoid the chicken tax. When a company does this, I find it hard to support it.

Edit, two quick stories:
http://blog.caranddriver.com/feds-watch ... officials/
http://www.foxnews.com/story/2009/09/22 ... n-tax.html

likegarden
Posts: 2378
Joined: Mon Feb 26, 2007 5:33 pm

Re: The money trail...import vehicle vs domestic.

Post by likegarden » Fri Sep 22, 2017 12:37 pm

We bought a Toyota Camry 4 years ago after finding it and the Honda Accord having the highest content of being US made. This year I bought a Chevy Malibu, made in USA, though having parts made in Mexico. We support the US made cars because their workers contribute to my Social Security and Medicare payments.

Jack FFR1846
Posts: 5738
Joined: Tue Dec 31, 2013 7:05 am

Re: The money trail...import vehicle vs domestic.

Post by Jack FFR1846 » Fri Sep 22, 2017 12:59 pm

Car companies do what they do to maximize profits. Whether that's keeping a factory somewhere full or reducing labor cost or finding a loophole around regulations. When CAFE first came into play, since domestic companies were importing and re-labeling foreign cars (Chrysler was one of the biggest sellers of Mitsubishi in the world), Ford threw them for a loop. To exclude these imports, CAFE specifically set a maximum import percentage to be considered in the fleet average. Too much import %, like simply relabeling a Mitsu and the car was excluded. So Ford took the Crown Vic (Or maybe back then it was called the LTD....don't remember) and sourced enough parts from outside the US to have it disqualified as a US car, and successfully got it booted from the CAFE. The Pinto was 100% considered American.
Bogle: Smart Beta is stupid

User avatar
Bylo Selhi
Posts: 1020
Joined: Mon Feb 19, 2007 10:40 pm
Location: www.bylo.org in the Great White North
Contact:

Re: The money trail...import vehicle vs domestic.

Post by Bylo Selhi » Fri Sep 22, 2017 1:04 pm

nickjoy wrote:
Fri Sep 22, 2017 11:37 am
I always thought a big part of capitalism was to buy a high enough quality product at the cheapest price.
Honda and Toyota have huge factories within 100 miles of where I live that produce their most popular vehicles (Civic, RAV-4). And yet, made-in-Canada Hondas and Toyotas are substantially more expensive here than they are in the US. Some of this can be explained by differences in taxation but the majority of the difference is "because they can", aka greed.
Granted, there are caveats to this. I won't buy anything from North Korea.
Out of curiosity what products does North Korea produce that you might buy were it not for the caveat? ;) (Notwithstanding that the US has a trade embargo against North Korea in the first place.)

nickjoy
Posts: 47
Joined: Tue Jun 06, 2017 9:44 am

Re: The money trail...import vehicle vs domestic.

Post by nickjoy » Fri Sep 22, 2017 3:48 pm

Bylo Selhi wrote:
Fri Sep 22, 2017 1:04 pm
nickjoy wrote:
Fri Sep 22, 2017 11:37 am
I always thought a big part of capitalism was to buy a high enough quality product at the cheapest price.
Honda and Toyota have huge factories within 100 miles of where I live that produce their most popular vehicles (Civic, RAV-4). And yet, made-in-Canada Hondas and Toyotas are substantially more expensive here than they are in the US. Some of this can be explained by differences in taxation but the majority of the difference is "because they can", aka greed.
Sure, but no matter how good the product is, if it's priced in the clouds, some consumers will go to the cheaper options. That doesn't mean all of them don't add cost to make their bottom line better. I see the strategy in being the cheapest guy around, and then being the cheapest guy by just a little tiny bit (wouldn't be my business strategy though).
Granted, there are caveats to this. I won't buy anything from North Korea.
Out of curiosity what products does North Korea produce that you might buy were it not for the caveat? ;) (Notwithstanding that the US has a trade embargo against North Korea in the first place.)
[/quote]

I just picked N. Korea to make it obvious. If you lived in a town that has a sock factory that employs 90% of the town, I probably wouldn't buy imported socks. If I had really bad experience with one manufacturer, it would be extremely hard to convince me to buy them (my friend had a car engine blow at 60K miles, he thought that was the norm, when I showed him my car at 220K miles, he wrote that brand off entirely).This whole fad with eating at 'local' places and eschewing chains. The chains can often times have cheaper food at the same level because of supply chains and tried/true menus.

As for products from N. Korea that I would buy. I don't really know anything that they make. Other than headlines.

BanquetBeer
Posts: 137
Joined: Thu Jul 13, 2017 5:57 pm

Re: The money trail...import vehicle vs domestic.

Post by BanquetBeer » Fri Sep 22, 2017 4:00 pm

Jack FFR1846 wrote:
Thu Sep 21, 2017 7:51 pm
My mom is the same way and will only buy "American" cars. She presently owns a Ford Fusion that was built in Mexico.

I saw a list recently with US content for every car model sold in the US. The highest % surprised me. It was one of the Toyota models (I don't remember which). I had thought my Toledo Ohio built Wrangler would have had more, but it doesn't.

I suppose profit goes somewhere, but since every car company I know of is public, wouldn't that go to share holders as dividends? Would we need to know where all the share holders lived to use that logic.
If a company makes a 6% ROI then shouldn't we focus more on expenses? Doesnt most of the money pay Japanese salary?

Jack FFR1846
Posts: 5738
Joined: Tue Dec 31, 2013 7:05 am

Re: The money trail...import vehicle vs domestic.

Post by Jack FFR1846 » Fri Sep 22, 2017 4:18 pm

BanquetBeer wrote:
Fri Sep 22, 2017 4:00 pm
Jack FFR1846 wrote:
Thu Sep 21, 2017 7:51 pm
My mom is the same way and will only buy "American" cars. She presently owns a Ford Fusion that was built in Mexico.

I saw a list recently with US content for every car model sold in the US. The highest % surprised me. It was one of the Toyota models (I don't remember which). I had thought my Toledo Ohio built Wrangler would have had more, but it doesn't.

I suppose profit goes somewhere, but since every car company I know of is public, wouldn't that go to share holders as dividends? Would we need to know where all the share holders lived to use that logic.
If a company makes a 6% ROI then shouldn't we focus more on expenses? Doesnt most of the money pay Japanese salary?
Beats me. Where's it designed? Where are components manufactured? Where's the final product built? Subaru Outbacks, Legacys and now Imprezas (not sure on 18 Crosstrek, but I think so) are built in Indiana. Are the engine/transmission assemblies shipped from Japan? Was design done in Europe? (I ask because the BRZ/FRS was designed by Toyota R&D in Belgium) I don't know. Ford Focus is currently built in the US but the highly publicized Mexico factory was canned and then announced that production is moving to China. But the Focus RS is built in Germany as is the engine for the Mustang GT-500 ("where they know what they're doing" - Jeremy Clarkson)
Bogle: Smart Beta is stupid

User avatar
friar1610
Posts: 1011
Joined: Sat Nov 29, 2008 9:52 pm
Location: MA South Shore

Re: The money trail...import vehicle vs domestic.

Post by friar1610 » Fri Sep 22, 2017 4:42 pm

My Buick Regal (a great old American brand) was built at an Opel plant in Germany.
Friar1610

jrmillions
Posts: 17
Joined: Mon Sep 03, 2012 5:26 am
Location: Columbus, OH

Re: The money trail...import vehicle vs domestic.

Post by jrmillions » Sat Sep 23, 2017 6:18 am

We currently own 3 Fords. 2003 Ranger, 2009 Explorer and 2014 Escape. All are good vehicles
The Ranger and Explorer were made with a high percentage of American parts and labor. The Escape I have not researched it. Being a government employee (firefighter), I feel that I should buy American made products. Americans do pay my salary not a foreign worker. Nevertheless, there is a Honda plant
50 miles from where I work. Many American employees work there that also indirectly pay my salary. So I wouldn't rule out buying a Honda.

User avatar
jabberwockOG
Posts: 1012
Joined: Thu May 28, 2015 7:23 am

Re: The money trail...import vehicle vs domestic.

Post by jabberwockOG » Sat Sep 23, 2017 8:06 am

Virtually every major car manufacture is a multinational corporation (with workforce and factories in multiple countries) owned primarily by non participatory shareholders via large funds. Tesla may be the current exception of any significant size in the US.

Buying "USA" when it comes to cars is an outdated obsolete concept that make no sense now, and made little sense even when it was semi-relevant (1970-1980s) because this attitude primarily encouraged the big 3 US car makers to continue to produce poorly designed, unreliable, low quality cars.

Today our cars are so much better, more fuel efficient, and safer primarily due to the intense competition from Asian as well as other car manufactures and brands. Savvy consumers exercising smart choices and rejecting jingoistic economic foolishness over time forced every car manufacturer to build high quality very reliable cars or go out of business.

BanquetBeer
Posts: 137
Joined: Thu Jul 13, 2017 5:57 pm

Re: The money trail...import vehicle vs domestic.

Post by BanquetBeer » Sat Sep 23, 2017 8:19 am

I have no interest in buying an American car brand.. I have been in a lot of aging cars in my life and my experience tells me American cars do not hold up compared to Japanese. The American trucks have done ok but those are generally high dollar items.

Polymath
Posts: 127
Joined: Wed Dec 30, 2015 10:52 am

Re: The money trail...import vehicle vs domestic.

Post by Polymath » Sat Sep 23, 2017 9:14 am

If you are concerned about "keeping the money" in your home country economy, I'd be far less concerned where something is built and and much more concerned about where it is designed. Materials next. Then assembly.

Generally that is the order of magnitude in costs, but also in terms of economic contributing activity. Assembly is increasingly automated and will continue to drop in total cost of bringing something to market. Design skills will continue to be in demand contributing to economic vitality in a more stable fashion.

For reasons I won't get into here, we are seeing a rush to build cars in the U.S. Just because something is put together here does not mean that is all a nationalistic buyer should look at. There is a reason Apple puts "Designed in California" on their phones while building them in China. How much value is captured by China labor vs the U.S. employees?

Bottom line, if your objective is to keep money "local" examine the entire supply chain ans see where all the work takes place. Final point of assembly is not that informative, nor are claims "most American made" as they are both misleading IMO.

Regards.

tev9876
Posts: 7
Joined: Thu Sep 14, 2017 9:12 am

Re: The money trail...import vehicle vs domestic.

Post by tev9876 » Sat Sep 23, 2017 3:14 pm

There is no such thing as an American car any more. The auto industry is global. My Ram truck built in Warren, MI has a transmission built in Germany and an engine built in Mexico. I believe they opened a transmission plant in the US shortly after I bought mine in 2013, but it is still a German design. I used to work for a major German automotive electronics supplier. The engine controllers built in Alabama were designed in Michigan and Germany. The software they ran was written in Michigan, Romania, Germany and India. The US auto supplier I currently work for is privately owned by Italians. We have an operation in Ireland, but no customers there. I believe we manage our European sales through Ireland due to the low tax rates.

Good luck figuring out that trail.

User avatar
bottlecap
Posts: 4954
Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: The money trail...import vehicle vs domestic.

Post by bottlecap » Sat Sep 23, 2017 4:42 pm

Here's the money trail no one thinks about: all dollars come back to the US to get spent. If you pay a Japanese company in dollars, they have to spend or invest that money here or exchange it with someone who will.

JT

Polymath
Posts: 127
Joined: Wed Dec 30, 2015 10:52 am

Re: The money trail...import vehicle vs domestic.

Post by Polymath » Sun Sep 24, 2017 12:08 pm

bottlecap wrote:
Sat Sep 23, 2017 4:42 pm
Here's the money trail no one thinks about: all dollars come back to the US to get spent. If you pay a Japanese company in dollars, they have to spend or invest that money here or exchange it with someone who will.

JT
Why do they have to come back to the U.S.? Lots of places and markets outside U.S. transact in dollars.

Valuethinker
Posts: 33143
Joined: Fri May 11, 2007 11:07 am

Re: The money trail...import vehicle vs domestic.

Post by Valuethinker » Sun Sep 24, 2017 12:19 pm

Polymath wrote:
Sun Sep 24, 2017 12:08 pm
bottlecap wrote:
Sat Sep 23, 2017 4:42 pm
Here's the money trail no one thinks about: all dollars come back to the US to get spent. If you pay a Japanese company in dollars, they have to spend or invest that money here or exchange it with someone who will.

JT
Why do they have to come back to the U.S.? Lots of places and markets outside U.S. transact in dollars.
And this is called seigneurage, the "exorbitant privilege" of being the owner of the world's currency.

Not kidding, it's a standard chapter in economics textbooks.

Basically the US benefits because a claim on the US Treasury, the US Dollar, is never redeemed. Whereas if you are British say (bows) then other countries get pounds, and redeem them for their own currencies. In effect the US gets an interest free loan from the rest of the world.

Estimates are around 50-60bn USD a year in benefit. Not huge, but it comes at the expense of everyone else. Perhaps we should complain? ;-).

Valuethinker
Posts: 33143
Joined: Fri May 11, 2007 11:07 am

Re: The money trail...import vehicle vs domestic.

Post by Valuethinker » Sun Sep 24, 2017 12:24 pm

Kenkat wrote:
Thu Sep 21, 2017 8:33 pm
I just gave up on the whole thing since I own two Chevrolets made in Ontario, Canada, a Toyota made in Kentucky, USA and a Honda made in Alabama, USA.
From a North of the Border perspective, auto parts and cars are both our largest export (to the US) and our largest import (from the US). I read at least one statistic that a part crossed the Canadian-US and US-Mexican border something like 18 times on the way to being a finished car.

Each company chooses the lowest cost and most efficient place to make parts, and the car, for that model. Nobody is "winning" or "losing" really-- or rather it tends to balance out over time. We are just one big car market. It's kind of like trying to figure out which part of the bathtub water is (at that moment) hotter or colder-- and it will change.

The real competition is between different states and provinces for location of final assembly plants. That tends to get expensive, really expensive, for the taxpayers of the "winner" states, and of course the loser states and provinces also lose.

The winner? Well if it is an NFL franchise it's either the franchise owners or the agents & their players (note the order in which I put the latter two ;-)). If it's a car maker then:

- buyers of cars (because car makers are in a fiercely competitive market, so a benefit then gets paid away)
- shareholders of makers of cars (maybe, but see point above)

Valuethinker
Posts: 33143
Joined: Fri May 11, 2007 11:07 am

Re: The money trail...import vehicle vs domestic.

Post by Valuethinker » Sun Sep 24, 2017 12:32 pm

TxAg wrote:
Thu Sep 21, 2017 5:43 pm
I have a coworker who refuses to buy an "import" vehicle. In today's discussion, it was Toyota. Even though Toyota Tundras are made in Texas (San Antonio) and they have a new headquarters in DFW, his reasoning is that the money goes back to Japan and not the US.

I don't think he's correct. I'm perfectly happy buying an import vehicle. We currently own a Subaru.

Can someone help me understand the through and through dynamics of where the money goes.
The thing is that car production is almost totally globalized now. In the case of North America, it's mostly split between 3 countries-- the big "imports" into North America also manufacture a lot there.

There *is* competition between states, and between provinces and states (Ontario, really), for final locations of production. And municipalities, too. That hurts those jurisdictions* and helps the companies, maybe, or they may have to pass that on to their customers.

So all that really is left over is the profit. Which at the corporate level is c. 5% of sales and thus more like 2-3% of retail sales after we strip out the dealer markups (the car company results don't have the final retail price of the cars in the sales line, just what the dealers pay them; and in any case the car companies make a lot of their money on the warranties (extended) and the financing, not the manufacturing).

For BMW it's something like 12% of sales and that is the highest of any car manufacturer (that produces millions of cars).

Of course the shareholders of BMW are global, as they are for Toyota, or GM. So their percentage of $1.00 of retail value (say 4 cents) is then distributed between domestic and foreign shareholders-- and some of the latter will be Americans (for car companies headquartered and stock market listed in other countries).

It's a bit like asking who benefits from an iphone sale? Well, American workers certainly do. Apple has about 35% gross margins (ie 65 cents on the dollar are spent on components and other bought in costs of sales) and 25% operating margins (after all costs but before interest and tax, Apple's shareholders are getting 25 cents on the dollar). However American manufacturing workers don't benefit at all from Apple iphone sales.

* the data on sports franchises say (more than) the benefits to the municipality are paid away to the franchise owner, which in turns inflates the commissions of agents and the pay of players. AFAIK it's fairly similar for a car plant, the cost per job created (even including spillover benefits) doesn't fully compensate for the cost of the incentives to locate there.

Valuethinker
Posts: 33143
Joined: Fri May 11, 2007 11:07 am

Re: The money trail...import vehicle vs domestic.

Post by Valuethinker » Sun Sep 24, 2017 12:36 pm

BanquetBeer wrote:
Fri Sep 22, 2017 4:00 pm
Jack FFR1846 wrote:
Thu Sep 21, 2017 7:51 pm
My mom is the same way and will only buy "American" cars. She presently owns a Ford Fusion that was built in Mexico.

I saw a list recently with US content for every car model sold in the US. The highest % surprised me. It was one of the Toyota models (I don't remember which). I had thought my Toledo Ohio built Wrangler would have had more, but it doesn't.

I suppose profit goes somewhere, but since every car company I know of is public, wouldn't that go to share holders as dividends? Would we need to know where all the share holders lived to use that logic.
If a company makes a 6% ROI then shouldn't we focus more on expenses? Doesnt most of the money pay Japanese salary?
No. Because Toyota or Honda or Nissan are not so much exporters, as manufacturers of cars in other countries. One would have to look at the numbers, but I believe most Japanese cars sold in America are now made within NAFTA. The big loser has been the "Big 3" states against states like Kentucky and Tennessee which have attracted much of the Japanese investment. And those Japanese plants are, by and large, not UAW plants.

https://www.bizjournals.com/columbus/ne ... n-u-s.html

75% of sales according to this.

http://time.com/4677817/american-cars-b ... facturing/

gives you car brands, but I am not sure of their percentages (Lincoln is really only 18% made in USA?)

http://kogodbusiness.com/reports/auto-index/

Some Big 3 models do top the list, but there are plenty of Japanese cars which are 75%.

killjoy2012
Posts: 898
Joined: Wed Sep 26, 2012 5:30 pm

Re: The money trail...import vehicle vs domestic.

Post by killjoy2012 » Sun Sep 24, 2017 1:02 pm

If all you look at is the assembly site location and part country of origin % sticker, you're only reading 1 chapter of the book. Go look at where each automaker's headquarters are at, where those white collar (well paid) jobs are, where the profits go, etc. The US Big 3 employ US workers at a level ~3:1 vs. the Asians. You can keep telling yourself that buying Toyota or Honda is buying American since they have a final assembly plant in US, just like you can tell yourself the Easter bunny is real.

User avatar
LadyGeek
Site Admin
Posts: 41020
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: The money trail...import vehicle vs domestic.

Post by LadyGeek » Sun Sep 24, 2017 1:35 pm

This thread has run its course and is locked (not personal nor actionable). General comment threads are off topic in the forums with "Personal" in the title. See: A reminder that non-investing general comment threads are OT
- It must be personal. In other words, you must be asking about your own situation. You can also ask on behalf of someone specific, such as a family member.

- It must be actionable. You must be able to do something specific with the replies that will make a difference in your situation.
If you have a specific question, please ask directly and provide sufficient information for members to supply appropriate advice.
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Locked