Jessica Harmon

Can Consumers Afford Not to Buy American Cars?

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In a world where many Ford models are built in Mexico, and some Toyota models are manufactured in Kentucky, buying Americancan get confusing. American car companies conduct operations overseas, but Asian and European automakers are bringing more of their work to the U.S. and employing Americans. So should consumers buy American cars built in another country or buy foreign cars built by Americans, right here in the U.S.?

According to Federal Reserve Bank of Chicago economist, Thomas Klier, "When it comes to longer term benefits, a lot of activity happens in the country in which the company's world headquarters is domiciled.” Klier has written extensively on the auto industry.

Klier says that buying a General Motors car or truck is still better for the American economy and for American workers, even if the particular vehicle was built in Mexico, Canada or Korea. The auto industry has become global, but even when the badge on a car's grill no longer indicates where a car was built, American car companies employ more American workers than do automakers based in other countries.

It may seem there is an economic benefit to buying an American-made foreign car. For example, the purchase of a Toyota Camry made on the assembly line in a Kentucky plant may seem to support an American worker who build parts for that car. But the bulk of Toyota's design, research and development operations still take place in Japan, ultimately benefiting the Japanese economy and workers.

On the other hand, most of the profit General Motors receives from selling cars supports its overall operations, which remain centered in the United States, helping the company survive, grow stronger, and develop new products. Also GM uses more American-made parts in their cars.

"In the aggregate, U.S. manufacturers still use more U.S. content than Japanese importers," says Martin Zimmerman, a University of Michigan economist and a former executive with Ford. And General Motors employs more people in the U.S. than Toyota or Honda, Nissan or Hyundai.

The complex global economy can make buying decisions confusing for Americans bombarded with increasingly complex information, but investing in American cars still supports the U.S. economy, regardless of the manufacturing location. U.S. automakers have responded well to American demands and have delivered compact cars, sedans, trucks, hybrids and minivans to meet the varied needs of all American consumers. A successful economic recovery and job growth depend on investments by Americans in American products and American cars.

Article Tags: American Cars, General Motors

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