• steve
• July 4, 2022
• 2 Comments

America, and specifically Detroit, Michigan, had once been the center of the world with car manufacturing, dating back to when Ford first started Model T’s in 1908. What happened to the auto industry is a perfect microcosm illustrating the blessings and the curses of globalization.

I can still remember in the 1970s and 1980s when Japanese cars were literally a joke. Our family would be driving our giant Buick station wagon and passing by us would be a tiny brown Datsun hatchback that would disintegrate if it touched our bumper.

But seemingly overnight, you started to see more and more Japanese cars on the road. My dad came from China (in the years before Mao), so when he came here to the US he refused to buy anything Japanese–for understandable reasons if you remember what Japan did to China in the Second World War. So he bought a Dodge. Which broke down in one year. And a Pontiac. Which broke down in three years. And another Buick. You guessed it–it broke down in two years. In the meantime, everyone else was buying Hondas and Toyotas that lasted for years. He finally “broke down” himself and got a Toyota Camry. It lasted for 18 years.

So what happened? Well, the free market worked the way it was supposed to. Japanese auto manufacturers built a better car, and the dollars from the market flooded their way. American auto manufacturers couldn’t innovate. Making matters worse, American auto worker unions demanded top dollar for labor–not understanding that their fight shouldn’t have been against their management, but against their counterparts in Japan who through efficiencies were spending pennies on the dollar. This led to a product that was the highest price and the lowest quality–and the destruction of the once-great American car brand.

Where we are today

As the Big 3 declined, Germany and Japan prospered. They continued to innovate their products and somehow they seem to keep their labor force happy. The true test will come very soon, however.

Why? As early as 1978, car makers from every country salivating at China’s market rushed into China. It was a clear case of myopia and ignorance of history on the part of American executives.

Many American executives pointed at Japan as an example of why outsourcing to China wasn’t a bad thing. But they forgot one important thing. Japan lost a war, and paid a dear price for the sins of their fathers. And as a society, they channeled this pain into becoming incredible innovators.

But think about this. China never lost a war. They are the same corrupt government as they were since 1950. But American executives in their stupidity looked at the color of Japanese skin and Chinese skin and decided that China was to be trusted just as Japan proved trustworthy.

And China milked this for all they could. In a move that was as brilliant as it was nefarious, China’s government insisted that any foreign power that wanted to do business in China had to agree to share all of its technology in the form of joint ventures. They didn’t need to steal intellectual property, as every company from VW to Toyota to GM to Daimler to BMW was throwing their IP at them, begging for it to be stolen.

And truth be told, China doesn’t even NEED to steal intellectual property anymore. All it needs to do is buy it. Not many people know that China’s Zhejiang Geely Holding Group bought Volvo in 2010. So Volvo ceased being a Swedish brand and is now 100% a China brand.

Because the China market is so big, it’s only a matter of time before China automakers benefit from their scale and decide that they can cut off the hand that fed them. So it’s only going to be a matter of time before consumers in Europe and the USA will be faced with the same choice they faced in the 1970s. Do I pay $50,000 for a Toyota, $70,000 for a BMW, or $20,000 for a Geely?

What’s the difference between how Japan did it and how China is doing it?

In the 1970s, Japan achieved lower prices and higher quality compared to the USA the “right way”. It innovated and it found a way to pay fair wages to workers in their growing economy.

But in 2022, China is going to achieve the same thing not through innovation but its totalitarian power over its people and its businesses. The CCP will encourage its companies to steal or buy technology. And then it will draw from its endless supply of low-paid wage earners–people who through the magic of socialism have been kept in poverty for decades and who would jump at the chance of being an auto worker for slave wages and the approval of The Party (or more likely, the promise of being left alone by The Party).

In 2016 a Buick representative told the Chicago Tribune, “We believe most owners won’t care where it is built as long as it fits their needs” when asked whether they would sell cars made in China in the US. And sadly, 49% of American consumers at the time said that they wouldn’t care either. This is how blind America become as a society, where for the sake of a low price tag we’re willing to turn a blind eye to quality, our own local communities, reliability, and perhaps worst of all, continuing to fund the CCP’s wanton disregard for human rights, labor practices, and environmental protection, not to mention its increasing bullying of independent countries like Taiwan.

The only question will then be–will American and European consumers be tempted with a low price tag and deliberately look the other way to China’s atrocities, thus allowing China to control yet one more entire industry? Let’s put it this way–consumers have been tested and have failed the test every step along the way with everything from toaster ovens to air fryers to socks to computers.

How I Put This List Together

In actuality, there aren’t a lot of cars being manufactured in China and shipped to the United States right now. And much of that is due to the United States’ tariffs of 2018. By 2015, it was inevitable that China brands would start entering the United States. China brands like BYD, SAIC Motors and Geely all had clear aspirations to enter the US market. But the tariffs stopped those plans in their tracks. And as a result of the tariffs–which FINALLY meant that the US was putting up a fight against China’s own tariffs and the manipulative tactics it used to achieve low manufacturing costs–China car imports slowed and some cars that had been produced in China, such as Volvo S60, were moved to the US.

But as much as the 2018 tariffs helped, eventually corporate greed and government corruption will open them up again. In fact, as I write this Treasury Secretary Janet Yellen is all over the media saying that the tariffs should be lifted (to her credit, Trade Representative Katherine Tai is pushing against her). But Yellen has a much louder voice (no pun intended), so we’ll see what happens. If Yellen gets her wish, expect to see the floodgates to China open up again.

There is really only one car that’s popular in the US market which remains made in China, and that’s GM’s Buick Envision. And this shows how deeply entrenched GM is in China–it’s cheaper for them to pay the 25% a year tariff than to manufacture the car in the US. Avoid that car at all costs.

How I put this list together

I referenced the research from Cars.com and research from the Kogod School of Business who did an excellent job of looking into which auto makers were making cars in the US. They didn’t just look at where the vehicle had its final assembly, but also at the country of origin for the parts, engines, transmissions, and workforce. See here for their methodology.

This list is a little different than others on this site. While for other product categories I tend to list any product made in a country other than China, in this case I’m looking just at cars made in the USA.

That doesn’t mean there aren’t a lot of great cars being made in Germany, Japan, and South Korea. I am thrilled with my Toyota RAV4 which was made in Japan, but I would have been just as happy with one made in Kentucky.

But in this case, I haven’t found any sources like Cars.com that did this level of analysis that included both final assembly and components. If anyone knows of a source like this please let me know. But for now, I’ll focus on company that clearly are as “all in” as possible on domestic manufacturing in the US and thus, which are not going to be affected if and when tariffs get lifted.

1. Tesla

This one surprised me the most, as it’s well known that Tesla has a giant factory in Shanghai, the Gigafactory 3, that serves the China market but also exports to Europe and Japan. But evidently, the US market is still able to be served by its factories in Fremont, California and Austin, Texas. A whopping 77.5%-82.5% of the material and parts in US-manufactured Tesla are sourced from the US or Canada.

Tesla also recently opened a factory in Berlin, which should allow European customers to get Europe-made models.

Time will tell if Tesla is able to sustain sourcing and manufacturing in local markets as opposed to getting everything sent from Shanghai. It is hopeful to see Elon Musk emphasizing the importance of keeping manufacturing local–in many ways it’s a throwback to when communities were built around manufacturing, and employees became ambassadors. Contrast this with executives at GM who just see customers as dollar signs.

The one danger, of course, is that US regulations make US manufacturing too expensive to maintain, and China regulations (or strategic and selective disregard for them) make China manufacturing too cheap to ignore.

Several Tesla models made the top 20, including the Tesla Model Y (made in Fremont or Austin) and the Model 3, Model X and Model S (all made in Fremont).

2. Ford

Ford is one I didn’t expect to see on the list, as they’ve already shown signs of off-shoring many of their models. Famously, they’ve decided to produce the electric version of their iconic Mustang, the Mustang Mach-E in Mexico for the US market, and recently started making them in China for the China market. They probably didn’t anticipate gas skyrocketing to $7 a gallon when they made the decision, so if and when Ford sees a windfall from off-shoring this model, let’s hope this doesn’t give them any ideas of off-shoring everything else.

In 2017, Ford made the decision to build their best selling car the Ford Focus in China, and then decided to stop selling it in the US altogether rather than deal with the 25% tariffs.

But I do see on this list the Lincoln Corsair (made in Louisville, Kentucky), the Ford Ranger and Bronco (both made in Wayne, Michigan), the Ford Expedition (made in Louisville), and the Ford F-150 (made in Claycomo or Dearborn, Michigan). And the original, gas-guzzling muscle car the Mustang is still made in Flat Rock, Michigan. So clearly Ford has shifted its US strategy to higher end (and higher priced) models. About 80% of the components come from domestic sources.

3. Jeep

There is hardly a brand that’s more American than Jeep, a brand which originated in its use by Willys-Overland who built the first four-wheel drive reconnaissance vehicles for the US armed services. The Jeep brand was bought by Kaiser Motors, which was bought by AMC, which was bought by Chrysler, which folded into DaimerChrysler, which sold Chrysler to a private equity company, which folded into Fiat Chrysler Automobiles, which was bought by Stellantis. Whew.

While several Jeeps were recognized in the top 100, including the Gladiator, the Grand Cherokee, the Wrangler, and the Wagoneer, it’s the Jeep Cherokee, made in Belvidere, Illinois, that made the top 20. For years the Jeep Cherokee sat on the top of cars.com’s list. It continues to be impressive with 79.5% of total domestic content.

4. Honda

Of all the Japanese carmakers, Honda seems to do the best with manufacturing in the United States. The Passport, Ridgeline, Odyssey, and Pilot are all made in Lincoln, Alabama and the Accord is made in Marysville, Ohio. The Acura MDX and RDX are also made in Ohio. According to Honda’s Web site, two-thirds of all Honda and Acura vehicles sold in the US were made in the US.

5. Dodge

Finally, rounding out the top 20 was the Dodge Durango, which is made in Detroit, Michigan. Like the Jeep brand, the Dodge brand had a storied history (the Dodge Brothers Company was originally founded in 1900) but ended up moving with the rest of the Chrysler brand to Stellantis. Of Dodge’s four current models, only the Durango made the list–the Challenger and Charger are made in Canada. But again, keep your eye on the other hand. The Dodge Journey (which isn’t currently sold in the North American market) is being made in China by the Guangzhou Automobile Group, Co. Ltd (GAC) which has a long-standing joint ventureship with Fiat-Chrysler (and now Stellantis).

Conclusion

I was pleased to see many other auto brands and models on the list, including ones you might not expect like models from Kia, Toyota, Nissan, and (sad that I no longer expect it) General Motors. It’s heartening to know that there is still an industry hasn’t been completely lost to China. But make no mistake–automakers need to take the lesson from other industries. The only reason they haven’t faced a challenge from China is that China automakers are so busy fulfilling the demand in their own country (using intellectual property gained from the forced “joint ventures” from automakers in the free world).

But as soon as the US government loosens tariffs, make no mistake that China brands are coming. And they’re going to have sticker prices that will be hard for consumers to ignore, helped in no small part by a corrupt government who will not hesitate to put their fingers on the scales.

What did you think of the Cars.com list? Are you outside of the USA and want to share your experiences with car brands that are honoring and protecting local communities and manufacturing? Let us know in the comments!