Edmunds Answers



  • karjunkie 04/16/09 2:31 pm PST

    Cars.com's American-Made Index rates vehicles built and bought in the U.S. Factors include sales, where the car's parts are made and whether the car is assembled in the U.S. Here is the site:


    Remember that when you look at new cars, the sticker should have not only the country of origin but also the pecentage amount of U.S. parts in it. Not surprisingly, many brands like Toyota and Honda are more "American" than some domestic brands that are actually made in Mexico or Canada.

  • hemurango 04/16/09 2:44 pm PST

    This is sort of a complex question, but luckily I've taken multiple accounting and economic classes to help me understand exactly how to answer it...and it's still a complex question : /

    You do make a great point, Honda (and Toyota) build their cars domestically to avoid huge tariffs (basically a tax placed on imported goods). This coupled with the fact that due to exchange rates, most of the US work force hired to build the cars is cheaper than building in Japan.

    Now getting to your basic question of where do the profits go - this is where things get interesting, and I'll use numbers to make it an easier to understand example. Let's use Honda, and say in 1 year, Honda sales 1000 dollars worth of cars. Out of the $1000, $200 were used to purchase the materials to build the cars, which leaves them $800, of which they have to use about $350 to pay their American workers and another $300. After all their expenses are taken out, Honda still has $150 in PROFITS

    Now most people would argue that this $150 goes back to Honda's HQ in Japan, but that's simply not the case. Honda now has a choice to make, it can reinvest the $150 into its company, maybe to build a new factory in America to increase production, or to buy another smaller auto company to gain rights to produce other vehicles. Another option would be to pay out stock dividends, which would mean anyone in the WORLD would make a gain off of however much Honda decided to give out; in short, depending on how Honda uses its profits, it will affect the world economy differently.

    Now people that are all for domestic vehicles and hate foriegn built because they 'hurt our economy' are drastically mistaken. Consider how much of that $200 used to purchase materials went to America. American steel is primarily used in vehicals today because it's higher quality and helps meet safety standards. I can't think of a car company that doesn't use American made tires, and the electronic systems are almost soley American made (Eg: Infiniti Speakers is located in Colorado, and Bose in Minnesota).

    The bottom line is this: we truly live in a globalized market. There's hardly an example of something you purchase that doesn't have profits that are shared around the world. If I were in your position, I'd buy a vehicle based on need and reliability. I needed an SUV for the work I do, and for pulling a trailer for remodeling. The Japanese makers didn't make one at the time that had the capacity of my Dodge, and the turning radius was a major factor. Then again, if you buy American, with how many more times your car will probably break down than a Japanese, just think about how much you'll be helping the economy with how much you'll be spending on auto repairs... I'll be buying a car soon, and I can promise you that it will be Japanese. I had a 94 Camry with 250,000 miles, I didn't treat it the best and had 0 problems. My Durangos an 04 and only has 55,000 and I had to fight the Dodge mechanics to fix 2 problems (although minor) that were under warranty.

    Hope this Helps


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