By Jacqueline Zajac
Director of Strategic Communication
Kogod School of Business
Washington DC April 4, 2014; The Ford F-Series pickup and the Chevrolet Corvette reign supreme in the new release of the Kogod Made in America Auto Index, revealed this week.
The Kogod index has a unique evaluation method to determine the domestic content of vehicles sold in the United States—which accounts for production factors ignored in other indices. It also compensates for the drawbacks of using self-reported regulatory data as the only measure of determining the "American-ness" of a vehicle sold in the U.S.
"This index provides the public with a more accurate reflection of the true country of origin of a car and the impact of its purchase on the US economy," said Associate Professor Frank DuBois, the index's author and an expert in global supply chains.
"And hopefully, it holds vehicle manufacturers accountable for the claims they make in marketing to U.S. consumers."
The top vehicles in the 2014 Kogod Made in America Auto Index are:
• F-Series Pickup, Ford (score: 87.5 out of 100)
• Corvette, Chevrolet (score: 87.5)
• Enclave, Buick (score: 86)
• Traverse, Chevrolet (score: 86)
• Acadia, GMC (score: 86)
• Acadia Denali, GMC (score: 86)
Although the Kogod index incorporates data from the American Automotive Labeling Act (AALA) into its calculation, it also includes relevant information such as the vehicle's location of assembly and the company headquarters location, where research and development occurs.
In calculating the index, DuBois derived seven individual criteria scores per vehicle, based on publically available data. These weighted criteria include:
1. Profit Margin: Where the automaker’s global headquarters is located. This is relevant as profits from cars return to the shareholders in the home country. (6 percent)
2. Labor: Location of assembly, included as the money supports workers in this country. (6 percent)
3. Location of Research & Development activities: Essentially, where the headquarters is located. (6 percent)
4. Inventory, Capital and Other Expenses: the location of assembly. (11 percent)
5. Engine: The location of production. (14 percent)
6. Transmission: The location of production. (7 percent)
7. Body, Chassis and Electrical Components: The location of where they are made. (50 percent)
As the Kogod index reveals, automakers with a U.S.-based headquarters rated highly in terms of overall domestic content, largely because the profit derived from the vehicles' sale was more likely to return to the U.S., and most R&D activities for these firms are located in the U.S.
Since 1994, the AALA has required automakers to document the percentage of American content in U.S.-sold vehicles. The AALA is useful in determining the country of origin of the parts and components and location of assembly of a vehicle but has some limitations, notably:
• Canadian and U.S. content are not separately calculated, but lumped together.
• Automakers can "round up" from 70 to 100 percent to calculate "local" content.
• Finally, all cars in one line are counted uniformly, which may distort the actual level of American content in a particular vehicle.
The 2013 Index: DuBois released the first Kogod Made in America Auto Index in 2013. In the first edition, GM topped the list with the GMC Acadia, Buick Enclave, and Chevrolet Traverse all scoring 88.5 out of 100.
AAPC Statement on the 2014 Kogod Made in America Auto Index
WASHINGTON, D.C. April 8, 2014; American Automotive Policy Council President Matt Blunt today issued the following statement on American University’s 2014 Kogod Made in America Auto Index that found Chrysler, Ford and GM comprised the top 10 most American-made vehicles.
The American Automotive Policy Council, Inc. (AAPC) is a Washington, D.C. association that represents the common public policy interests of its member companies Chrysler Group LLC, Ford Motor Company and General Motors Company.
2014 KOGOD "MADE IN AMERICA" AUTO INDEX
KOGOD MADE IN AMERICA AUTO INDEX
Profit Margin, 6%: 6 if U.S. company; 0 if foreign
Labor, 6%: 6 if assembled in U.S.; 0 if foreign
Research & Development,
6%: 6 if U.S. company; 3 if foreign and assembled in U.S.; 1 if foreign and
Inventory, Capital, & Other Expenses, 11%: 11 if assembled in
U.S.; 0 if assembled outside of U.S.
*Data for 2014 was not available. Data used from AALA 2013.
**At the time most AALA data was reported in late Fall 2013, Chrysler
was 41% owned by the UAW pension fund. In January 2014, Fiat completed its
takeover of Chrysler and now holds 100% of its shares. The new entity Fiat
Chrysler Automotive (FCA) is to be headquartered in the Netherlands with a
tax domicile in London, and shares listed in New York. As such, because of
the hybrid nature of its organizational structure and its large production
footprint in the U.S., we assigned a value of 3 for profit margin and R&D,
rather than 6 or 0.