
Buy American Cars (or Not) - omarish
http://priceonomics.com/cars/#buy-american-cars
======
kstrauser
We bought an American Toyota Sienna. It was made in Kentucky by American
employees, with the profit margin going to a large, multi-national
corporation. Its competitors were a Canadian Dodge, a Canadian Ford, an
Alabaman Honda, or a Chinese Kia - each with its profit margins going to a
large, multi-national corporation.

I'm not even sure what an American car _is_.

~~~
mmphosis
Yup, the Toyota Sienna is a (North) American built car.

[http://en.wikipedia.org/wiki/List_of_Toyota_manufacturing_fa...](http://en.wikipedia.org/wiki/List_of_Toyota_manufacturing_facilities#United_States)

[http://en.wikipedia.org/wiki/List_of_Toyota_manufacturing_fa...](http://en.wikipedia.org/wiki/List_of_Toyota_manufacturing_facilities#Canada)

[http://en.wikipedia.org/wiki/Toyota_Motor_Manufacturing_de_B...](http://en.wikipedia.org/wiki/Toyota_Motor_Manufacturing_de_Baja_California)

So are...

Honda <http://en.wikipedia.org/wiki/List_of_Honda_assembly_plants>

Nissan: Smyrna, Tennessee; Canton, Mississippi; Decherd, Tennessee

Mitsubishi (DaimlerChrysler)

Mazda (Ford)

Subaru (GM)

Isuzu (GM)

It is very very difficult to import a truly foreign built car. There are many
many obstacles in the way. The "Made in Japan" cars are leaps and bounds ahead
of anything built "for" North America. If we were actually able to buy them
here, the prices for cars from South East Asia would totally disrupt the North
American car market -- maybe there are some startup ideas in this!

------
bradleyland
It's interesting to look at this kind of data, but there are a few
correlation-causation flaws. For example, the final graph is titled "How Bad
Grammer Affects Car Resale Prices". We cannot say that the bad grammar is the
_cause_ of the lower sale price, only that it is correlated. It is just as
likely that undereducated individuals are correlatively more likely to own
less expensive cars and use poor grammar.

~~~
binarysolo
Came here to say the same thing -- perhaps less educated individuals are more
amenable to lower prices, more willing to bargain, less understanding of
market prices... but that's all correlative.

------
ck2
The right thing to do is a buy a USED car with decent mpg. Saves massive
amounts of energy creating a new car.

Of course it's not the "patriotic" thing because it would collapse a good
chunk of the economy built around Detroit if no-one bought a new car for a
year.

I don't expect everyone to drive a 15 year old car like I do, but I simply do
not understand why people buy brand new cars when the previous year model with
only a few thousand miles will be thousands of dollars cheaper.

~~~
evgen
Where do you think your used car is coming from? If no one bought a new car
for a year whose car would they buy?

Buying used (or coming off lease) is generally a wise choice, but sometimes
there really is a qualitative feature difference between this year's model and
previous ones. If you are selecting a vehicle with mediocre milage in the
first place, getting a new model could mean a 15-20% difference in mpg and
that will probably pay off the price differential between the new car and a
used car.

~~~
Androsynth
What would happen is the price of new cars would be drastically slashed until
people started buying them. This would start a chain reaction that would
propagate all the way down the supply chain.

For the reason why this would actually be a good thing, I recommend (to
everyone who will listen!) to read _How an Economy Grows_ <http://freedom-
school.com/money/how-an-economy-grows.pdf>

Its kind of long, but its a very entertaining read.

------
liber8
Maybe I'm reading these graphs poorly, but doesn't the type of car people buy
seem to correlate highly with the affluence of the area? There's more money in
NY, LA, SF, San Diego, etc. (as shown by the graphs at the bottom), so more
people in those cities drive nicer (european) cars.

What am I missing?

------
ars
Honestly I am seeing simply randomness here.

If you plot any piece of random data, and then sort by frequency you'll get a
graph that looks more or less like this.

I think you should verify your data in two ways:

1: Plot the graph for each year separately, and see how correlated the years
are. If the rankings are the same year after year then you have something,
otherwise it's just random.

2: A second thing is randomly divide American and non-American each into two
groups by model (just randomly assign each model into american 1, american 2,
non 1, non 2). Then plot the data for each group in each place, and see if the
rankings are the same - if they are, then the American vs not distinction is
valid. Otherwise, again, you just have random data.

~~~
ianferrel
You think it's random that Detroit buys American cars and New York doesn't?

I'm sure there's some noise here, but the above strongly confirms conventional
wisdom.

~~~
ars
Detroit I get - but what's special about New York?

~~~
Duff
Try parking in Queens sometime.

"American" small cars have a reputation that is not so good.

------
cema
Many commentators talk about what the "American car" means, that there is no
such thing any more, cars are internationally designed and produced, etc. All
correct, I suppose. But notice that the linked article is using the
combination of words "American car" as a shortcut for the "American branded
car", which they also mention several times.

And indeed I think a commentator has remarked that the focus is on the
consumer behavior, not the car industry per se. If the distinction is ignored
by the main body of the customers, it can be not too important for the
researchers as well.

~~~
kstrauser
I admit that I know what they mean by "American car", but I dispute that their
definition is actually meaningful. I lived in a very small Midwest city when
we bought our Sienna. Neighbors driving a Mexico-made Chevy Suburban asked why
we didn't buy an American car. What makes GM - a publicly traded corporation -
substantially more American than Toyota - another publicly traded corporation?
Both have American and non-American factories. Both have American and non-
American employees. Both sell to American and non-American dealers. Other than
marketing image, what's the fundamental difference?

~~~
cema

      what's the fundamental difference?
    

Perception. And it should not be neglected. (Especially by the researchers who
study it!)

------
grandalf
This is somewhat misleading and certainly not due to patriotism.

Car companies have massive discount plans for workers, friends and family,
supply chain workers, previous customers, etc.

Detroit has lots of automotive industry workers, and thus for _many_ people
around Detroit, it's silly not to buy the car that you can get at a huge
discount. This isn't necessarily an American vs non-American choice, since
workers are typically eligible for a steep discount with only one car company.

Around the time that Japanese automakers began producing quality products,
automotive execs in Detroit looked out their office windows and saw an
increasing number of competitors' cars in the parking lot and it scared them.
What kind of statement is it when a worker buys the competitor's product. So
they offered steep discounts, which are pretty much guaranteed to result in
workers buying their employers' product.

In more recent years, this has also been used to boost sales numbers in times
of crisis. US automakers have had miles of unused tarmac near Detroit Metro
airport filled with cars that they couldn't sell. At some point they just
offer a steep employee discount and now a bunch of dud product that is losing
money can be turned into a few months of strong sales. By using employee
discounts for this, the firm is not seen to be succumbing to massive
widespread discounting, and so the technique stays off the radar fairly
effectively.

When you consider the cities that have automotive plants, supplier
manufacturing plants, etc. and all the discounting going on in these areas,
the chart starts to make a lot more sense.

Now for a small rant: Ironically, preventing workers from experiencing
competitive products seems to have created tremendous myopia in Detroit and
may be responsible for the decline of the US auto industry. Detroit is _still_
using cheapo vinyl and plastic on midrange and even low end luxury cars, far
inferior to the materials used on low trim-level Honda and Hyundai models.

One can imagine that if more workers had needed to think carefully about what
they wanted to drive, the handwriting would have been on the wall and
something could have been done about it before it was too late.

Note to business owners. If you have to discount your product by over 20% to
get your own employees to buy it, take a closer look at what they prefer about
your competitor's product.

~~~
coin
I disagree. I worked for Chrysler near Detroit during the mid-90s. The
Chrysler employee discount wasn't much better than if you did a good job
bargaining at the car dealer.

In the Detroit area, there was tremendous pressure to buy American. I observed
this both from friends and coworkers. There was definitely at attitude that
you should support the local economy, especially if you're employed by one of
the Big Three. If company X is employed you, then you need to buy company X's
product. It's almost as if you owed it to your employer, that your paycheck
somehow has strings attached, that the proceeds should never be used to
purchase a foreign car.

Chrysler took it a step further and forced non-Chrysler cars to park in the
"competitive vehicle parking area" of the employee parking lot - which happens
to be the farthest few rows.

~~~
mc32
I don't think it's too outlandish to expect people who work on building a
product to buy the brand of product they help manufacture.

Imagine Google engineers NOT using GMail --or, rather, avoiding GMail.
Exceptions for studying the competition and all.

Imagine the pressure form colleagues. "Yeah, I work at Google, of course, but
I prefer to use Hotmail. I don't even have a GMail account".

It's their version of dog-fooding it. Albeit, one with greater bottom line
involved.

~~~
coin
I've met many Microsoft employees who use iPhones. Can you blame them?

I believe that as an employee, I am free to purchase any product or service
without any obligation to my employer.

------
notaddicted
tiny nitpick, the typical three letter code for Japan is JPN, not JAP.

~~~
rohin
Thanks for pointing that out. Fixed it!

------
bane
This explains a few things to me:

I feel a particular affinity between D.C., SF and NYC, I wonder if it's the
similar mix of cars that do it?

More importantly, I see sales figures for some American cars, and find them
unbelievable. I see way more Hondas, Toyotas and Hyundais these days then just
about anything else. Stop at a stop light and I guarantee there will be on of
the above three cars one car away from you.

Then I travel to the midwest, lets say Ohio. And boom, American cars
everywhere. Those three brands above are almost nowhere in sight. And suddenly
the sales figures make sense. I can't remember the last time I've seen a a
Ford Fusion, but they move around 20,000 a month. In Ohio, I can't remember
_not_ seeing a Ford Fusion.

------
npalrecha
Moving to the bay area from Detroit. The first thing I noticed was the lack of
American cars.

------
Aloha
I buy American cars for several reasons:

1\. Most American cars are NOT world cars, I'm a big guy, 6'3 300 lbs, I dont
fit well in a world car, so I'm always looking at vehicles designed for the
North American market, plus I do a whole lot of long distance driving.

2\. Less intensive maintenance schedule, my town car will never need its
timing belt changed, nor a valve adjustment, the primary services done, are
simply to change fluids.

3\. While is sounds jingoistic, its patriotic, I prefer to buy something made
here.

~~~
simonsarris
Both the Toyota Camry and Honda Accord are more made-in-america than the
Lincoln Town Car (but not by much).

What's worse, the Lincoln Town Car got the worst score possible for expected
ownership costs (1 out of 5) and had a 55/100 overall score.
(<http://www.consumerreports.org/cro/lincoln/town-car.htm>)

Compare to a Camry's score of 93 or the Accord's score of 90, with 5 and 4
points for ownership costs respectively.

Lots of foreign cars are made in America, several of them are far more
American-made than American cars are.

Check your own car here:

<http://abcnews.go.com/WN/MadeInAmerica/page?id=13795239>

Or see the Consumer Reports article on it here:

[http://news.consumerreports.org/cars/2011/06/how-much-of-
you...](http://news.consumerreports.org/cars/2011/06/how-much-of-your-car-is-
made-in-america.html)

------
jgmmo
I love how you guys at Priceonomics include our little town of Eugene in your
analysis. Nice to see how we compare :)

Keep up the great work, always a pleasure to read one of your articles.

------
rmundo
Back when I was studying in Michigan this topic came up one night over beer.
Almost everyone there knew a friend of a friend or family member who could get
them a decent employee discount on American cars.

------
PaulHoule
If you walk around in downtown Ithaca you might get the idea that Chevy and
Ford are exotic nameplates like Ashton-Martin or Ferrarri.

Hang out at a gas station 8 miles away, however, and you see maybe 50%
American cars.

------
midas
I wonder what iPhone ownership is like in Microsoft's turf (Redmond WA)?

~~~
Aloha
Lower then it is in the bay area, just from observation.

------
zwieback
I'm surprised that Portland doesn't rate higher in Subarus. It always seems to
me that 30% of all cars there are dark green Subarus.

Also, why is Salt Lake so high in used-car prices? Large Mormon families?

~~~
SNK
Subarus tend not to make it to the used-car market because they stay wonderful
forever. ;-)

------
pg_bot
There is no such thing as an "American" car anymore. All (major) car companies
operate at a global scale, and are dependent upon many different nationalities
to produce their products. There are thousands of Americans employed by
foreign auto manufacturers just as the opposite is also true. Yet Detroit is
treated as if it were a sacred cow, and their advertising is geared toward
instilling nationalism. However if you were going to buy a new car would you
say it was any more patriotic to buy a Toyota that was manufactured in South
Carolina or a Ford from Mexico?

------
SNK
I'd expect places with Real Winter to have different taste in cars than
California, wouldn't you?

------
InclinedPlane
A bit arbitrary. Many "Japanese" and "German" cars are manufactured in the US.

~~~
bdr
I think your criticism applies more to the consumer behavior than to this
analysis of it.

------
J3L2404
Rhode Island is not a city.

~~~
lsb
Yes, but the population of Rhode Island is ~1M, half as big as Brooklyn, a
borough of a city.

