where are cars manufactured

For most part, most of the Japanese cars are made in the U.S. and the U.S. cars made in Mexico or Canada.

"For the most part?" In the case of American cars, I mean?

I've seen a number of discussions about whether a certain car is/is not American/Japanese/whatever. There's always somebody confusing the issue by saying, "B-but the factory is in the U.S., so by definition, that Toyota/Honda/whatever is an Amer- ican car!"

No so fast, sez I. Two factors outweigh that. One, if the parts (or a majority of the parts) are made in Japan and are only as- sembled into a finished car in the U.S., then as far as I can see, that makes it a Japanese car. And even more fundamentally, if the company (say, Toyota) is Japanese, and the profits from these cars are going to Japan, that *really* makes those cars Japanese.

Geoff

Profits? how about who supports more American people with jobs? You can look at that too. A Chevrolet Suburban is 50% american parts, 50% foreign parts made in Mexico. A Toyota Sienna is 95% american parts, made in U.S. I think buying the Sienna is supporting more U.S. folks.

Okay, good point. Local jobs are undeniably a Good Thing. But even after purchasing all those parts and paying all those sal- aries, profits are still going someplace. Where that place is, it seems to me, is the bottom line, whoever else benefits.

Geoff

The profits go to the share holders all over the world. But the REVENUES, which are much larger than the profits, mostly go the people who build the cars (in the form of wages), and they are American.

Merritt

GM lost $8.6 billion in 2005 and Ford made around $2 billion, Toyota made around $11 billion.

How does your logic apply in this case?

Shhhh! Don't muddy the discussion with logic!

If what you say is true the Americans that work in all assembly plants paid taxes to the states and federal governments. Seems like GM did not pay any federal corporate income tax for 2005 since they had a loss. Ford paid federal corporate income tax, of around 41%, on two billion. Toyota like GM paid no federal corporate income tax but earned a profit in the US of 11 Billion. Guess who made of for the taxes GM and Toyota did not pay? One other difference the workers in the union plants like those operated by GM, Ford and the GM/Toyota plant in California earned a lot more money and had much better benefits and pensions. ;)

mike hunt

According to the US Commerce Department in 2005 80% of the vehicles GM sold in the US are made in the US a have a '1' as the first number of the VIN.

75% of the vehicles Ford sold in the US are made in the US a have a '1' as the first number of the VIN. 60% of the vehicles Chrysler sold in the US are made in the US a have a '1' as the first number of the VIN. 45% of the vehicles Honda sold in the US are made in the US a have a '1' as the first number of the VIN. Less than 20% of the vehicles Toyota sold in the US are made in the US a have a '1' as the first number of the VIN. They are the ones built in the GM/Toyota plant in California. The balance have a '4' assembled in the US of less than 70% but more than 40% American parts or a '5' assembled in the US of less than 40% American parts or a 'J' assembled in Japan.

mike hunt

I don't see the relevance of this information to the thread.

Also, a clarification: those numbers are worldwide for GM, Ford, and Toyota, not just the U.S.

No surprise. Nothing "Mike Hunt(er)" ever says is relevant to any thread.

They are made in the factory. DUH!

Wait a minute! How would Toyota avoid paying US corporate taxes on profits made in the USA?

Merritt

When a foreign company imports goods in to the US, it is very easy to make the US subsidiary look like it is not making any accounting profit in the US by having the foreign parent company charge too much for the imports. That way the foreign company makes all the profit, and is only taxed in their own country (so the taxes go to their own government).

To alleviate this problem, the US charges foreign companies a tax on any "net cash" investment that is removed from the US and sent back to the foreign country. So foreign companies are taxed based on cash outflow, instead of net income (profit/loss). It is common for domestic US companies to show an accounting loss, even though they have a positive cash flow.

So in this way, it is not possible for foreign companies to dodge US taxes with fancy accounting, but it still enables Mike Hunt to make the misleading claim that foreign companies do not pay "income" taxes.

Thanks for that clarification. Makes a lot of sense.

Merritt

I did read somewhere that Toyota's overall tax burden is something like triple the tax burden on U.S. domestic nameplates so if anything, Toyota and other Japanese nameplates are at a disadvantage when it comes to the tax component of their costs.

The corporate income tax in Japan is indeed higher than in the US, that is why Japanese corporations do not pay US federal corperate taxes. However Japanese corporations are paid by the Japanese government for products they export or assemble outside of Japan. The purpose is to return more capital to Japan. The Japanese economy is so screwed up there is little capital for new investment produced within the county. The interest rate in Japan are so low a corporation can borrow from Japanese banks at zero interest.

mike hunt

Credits for taxes paid in Japan. Unlike Europe taxes must be paid regardless of taxes paid in other countries. That is one reason why Japanese corporations are less successful in Europe where all manufactures are taxed the same on the profits earned.

mike hunt

: Okay, good point. Local jobs are undeniably a Good Thing. But : even after purchasing all those parts and paying all those sal- : aries, profits are still going someplace. Where that place is, : it seems to me, is the bottom line, whoever else benefits.

Er, it appears that you didn't read what I wrote very carefully. Let's recap the discussion so far.

I was addressing the matter of whether a given car should be considered American or foreign. I said that the relevant criteria are where most of the pats that comprise the car were manufactured, and especially where the company that made it is based, since that determines where the profits from its sale go.

Somebody (Dan J.S.) added that where the car was assembled should also be taken into account, because of the wages paid to the people who assembled it. I said that even considering this, the profits from the sale of a Toyota (for example) still end up going to Japan, not to the U.S.

So...where does your question above enter into this? Are you suggesting that whether or not a car should be considered American should vary depending on its manufacturer's profits or losses, both in absolute terms and relative to those of other manufacturers?

That strikes me a needlessly cumbersome. And in any case, the profits still go to Japan in the case of Toyotas, Hondas, etc., regardless of their amount.

Geoff