Imagine two car companies. One sold almost three-quarters of its vehicles outside the U.S. Another built 90 percent of its autos sold in the U.S. in America.
What are the names of these companies? It may be surprising, but the one that sold over 73% of its vehicles outside the U.S. is GM, while Honda built almost all of its U.S. vehicles in the first half of 2010 in the U.S.
Another “domestic” automaker, Ford, also sells the majority of its vehicles abroad, while the top “import” brands build the majority of their light-duty vehicles sold in the U.S. right here. In 2010, Ford sold 64% of its vehicles abroad,* and in a relatively average month (May 2010), 69% and 70% of Toyota’s and Nissan’s U.S. sales, respectively, were built domestically.
According to a cars.com analysis from the first half of 2009, Honda also has roughly the same domestic content in its U.S. vehicles (58%) as the automakers headquartered in the U.S. (60-69%).
This increasingly global auto market makes such distinctions between “domestic” and “import” brands less and less relevant, with important policy implications that support stronger fuel economy standards in the U.S.
Countries outside the U.S. generally have stricter fuel economy standards and targets than current policy in the U.S. Automakers generally benefit if they can make similar vehicles around the world rather than niche products for individual markets. Ford, for instance, is embracing this concept of creating similar vehicles around the world, calling it “Ford Global DNA.” If the U.S. raises its standards to levels abroad, automakers can sell fewer models globally and cut costs.
Similarly, auto companies based both here and abroad support many American jobs. It makes little sense to weaken fuel economy standards just to try to protect GM, Ford and Chrysler jobs – especially when the companies clearly need to compete abroad as well. The most discussed proposal for standards out to 2025 contains a separate light truck standard, which accounts for the greater reliance of these companies on light truck sales.
As time goes on and sales outside the U.S. continue to grow, automakers will have even more “global DNA,” and the distinctions between Detroit and automakers based abroad will likely blur further. Similar fuel economy standards around the world should benefit these global companies.