2016 Kogod Made in America Auto Index
Provided by Associate Professor Frank DuBoisAmerican University Kogod School of Business
WHAT is the Auto Index
What percentage of your vehicle’s value contributes to the overall well-being of the U.S. economy? How does your car impact the U.S. automobile industry’s economic vitality? And, most importantly, why does this information matter to you?
Kogod's 2016 Made in America Auto Index seeks to answer these questions by evaluating the domestic content of vehicles sold in the US. The index takes into account other aspects of vehicle manufacturing that are not accounted for in other measures. Seven criteria are considered, including profit margin, labor, and research and development location, among others.WHY is the Index important? ECONOMIC IMPACT
In 2015, of the 17.5 million vehicles sold in the U.S., approximately 65 percent were produced in the United States. That same year, the auto industry directly employed approximately 1.55 million workers and supported an additional 5.7 million jobs in repair shops, part supply stores, and car dealerships.
As such an important part of the U.S. economy, understanding the factors that influence the automobile industry is not just helpful—it is essential. A vehicle’s domestic manufacturing composition plays a key role in determining its overall impact on the American economy. This knowledge empowers consumers and automakers alike to make better economic decisions about where a car is made, and which offer the greatest commercial benefits to the country.
IMPROVING ON THE LABEL
One of the first things a consumer looks at while car shopping is the price and options label. Since the enactment of the American Automotive Labeling Act (AALA) in 1994, automakers are required to provide information on the label detailing the amount of U.S. and Canadian parts content, the country of assembly, and the engine and transmission’s country of origin.
AALA data, while useful, is not the most accurate means of assessing a vehicle’s contribution to the U.S. economy. It presents a number of limitations; U.S. and Canadian content are combined into one number, and automakers are allowed to round-up a part that is potentially only 70% U.S./Canadian to 100% U.S./Canadian.
Kogod's method improves on the AALA data by incorporating a more comprehensive research methodology, providing consumers with a more accurate view of their vehicle's composition.