Monday, July 10, 2017

Those darn foreign cars


 Until the 1960’s, foreign cars did not make much of a dent in the American car market. By the early 1950’s, General Motors was the largest corporation in America, and from 1949 to 1978, the full size Chevrolet was the best-selling car in America for all but 3 years.  

By 1955, General Motors became the first corporation in America to pay $1 billion in taxes, and the only employers in the world who were larger than General Motors were the combined Soviet agencies. 

Needless to say, things have changed a lot in recent years. 

In 1949, Volkswagen sold exactly 2 cars in the United States, but the company’s sales increased dramatically in the 1960’s, in large part to the efforts of their advertising agency, Doyle Dane Bernbach. In 1999, Advertising Age’s “The Century of Advertising” voted Volkswagen’s “Think Small” ads as the no.1 campaign of all time. In 1970, Volkswagen sold 570,000 Beetles, its peak year for the model. 


If you read through the link below, you’ll discover that General Motors has had some tough times in recent years, which culminated in the firing of its CEO by the President of the United States in 2009. 

Up until the 1970’s, Japanese cars sold an insignificant number of cars, even though Toyota first started selling cars here in 1957. Over time, the deteriorating quality of domestic models, coupled with safety issues for VW, helped Japanese car sales to increase  In 1982, Honda became the first Japanese brand to establish a manufacturing plant in America (in Marysville, Ohio). Other Japanese makers quickly followed suit, and today, Honda has 4 manufacturing plants in America, and Toyota has 6. In addition, Nissan, Subaru (Fuji Heavy Industries), and Mitsubishi all built plants here, and they have been followed by other European and Asian companies.     

 Although the full size Chevy was the best-selling car in America for decades, it eventually lost its crown to the Oldsmobile Cutlass, which was the best-selling car in America in 1976, 1980, and 1981. 

The Ford Taurus was the best-selling car in America between 1992 and 1996, but gradually fell from favor. For the last 15 years, the Toyota Camry has been the best-selling car in America. Prior to 1998, the best-selling Japanese model (for 15 years) was the Honda Accord. 

General Motors was the largest auto manufacturer from 1932 to 2009, when it get passed up by Toyota. In 2014, General Motors got passed up by Volkswagen, and is now the THIRD largest car company in the world. Eventually, of course, one of the Chinese companies will move to one of the top tiers, since China is currently the largest car market in the world. China already makes models for Volvo and Buick that are sold in America, and that trend will likely continue. 

Korean cars first entered the American market in 1985, when the Hyundai Excel was introduced to our market. The car’s quality was good, and the car sold in large numbers because it was considered to be a bargain. 

The Hyundai Motor Company was founded in 1976. After its merger with Kia, it is now the 4th largest auto manufacturer in the entire world, behind Toyota, VW, and General Motors.  The company’s manufacturing plant Ulsan, South Korea is the world’s largest integrated auto manufacturing facility.  

Many Americans would not even consider buying a Kia, but here is something to consider: 

For the last 2 years, Kia has had the best initial quality of any manufacturer, according to J.D Power and associates. If you also include Genesis (another Hyundai subsidiary) and Hyundai, you’ll realize that Hyundai has captured 3 of the top 10 spots in the survey.

Today, there is no such thing as an American car, or a Japanese car, or a European car, since all vehicles use parts from all over the world. The car that has the highest percentage of American parts and labor is actually the Toyota Camry, and cars that you might consider “American iron” (like the Chevy Impala) are actually made in Ontario Canada. If you are curious where a car is built, the first number (or letter) of the 17 digit VIN will tell you that information.

A few months ago, our Nissan Altima (made in Smyrna, Tennessee) had outlived its usefulness, and was replaced by a Hyundai Sonata. You can consider it to be a Korean car if you want, but only if you consider Montgomery Alabama (where it is built) to be part of Korea.  

At the beginning of this article, I mentioned that General Motors was the first corporation in American to pay $1 billion in taxes, so here’s a fact that will surprise you:  

In addition to my Social Security income, I also receive income for being a substitute teacher. Since both my wife and I are both over 65, we qualify for a double exemption, so our taxable income for at least the last 2 years has been ZERO. In spite of that fact, though, we paid more in taxes than General Motors, who had a tax CREDIT in 2015 of $1.9 billion, even though its earnings before taxes were $7.7 billion. General Motor’s worst year was 2008, when it lost over $30 billion, and had to be bailed out by the U.S government. 

In pure dollar amounts, the government lost over $10 billion on its investment in GM, but saved the country from a disaster that would have been far worse. However, when you factor in the profit that the government made from its $432.7 billion in both TARP and the auto industry, the government actually made a PROFIT of $10.9 billion, including the $10.5 billion it lost on General Motors.  

If you’ve ever hesitated to buy a “foreign car”, consider this: 

In 2010, only 3 of the top 10 cars sold in America had domestic names, but 9 out of the 10 were made here. In 2010, Chevrolet (the “most American” of brands) sold 20 models in American but only 10 of them were made here. . 

 You can still the USA in your Chevrolet, but you’ll meet a lot fewer Chevys along the way than you used to, and you’ll see a lot more of “those darn foreign cars”.









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