It’s a wonder to me how any American who pays taxes could look at the graphic below and not be livid with outrage.
In 2008, after GM fell on hard times and had squandered its profits on stock buybacks, U.S. taxpayers bailed out the company because of a long-held presumption that what was good for GM was good for America. It seems reasonable to expect that a company owing its existence to the benevolence of the citizens where it is headquartered would have an unwavering loyalty to them. GM CEO Mary Barra thought otherwise.
GM’s disloyalty to America is more damning than the graphic suggests because it includes the automaker’s Canadian operations. As I’ve previously argued, GM and Ford had an obligation to build plants in Canada because they are the two leading automotive brands in that country, with a more than 30 percent combined market share. GM and Ford didn’t choose to build cars in Canada because the labor costs were significantly lower.
That’s not true in Mexico, where GM and Ford pay their workers poverty wages and require them to work under punishing conditions that I’ve read even discourages bathroom breaks. GM enjoys brisk sales in Mexico but most of the vehicles the company sells there are made in China.
Barra’s original game plan was to export more vehicles from China to sell in the U.S., but Trump during his first term threw a wrench in her plans imposing tariffs on China-made vehicles. Within months of President Biden’s election, GM announced it would spend $1 billion to electrify one of its plants in Mexico, where the company builds three of its most affordable electric vehicles and no doubt planned to build more had Trump not been elected.
Although not to the same degree as GM, Ford also moved significant operations to Mexico, where it proudly builds its electric Mustang, the third best-selling EV in America, as well as its red-hot Maverick pickups and Bronco Sport SUVs. Ford also has significant engineering operations in Mexico, which possibly figure in a damning lawsuit alleging a design defect (see below).
No mercy deserved
The corporate media coverage of Trump’s tariffs has been sympathetic to GM and Ford, portraying them as innocent victims of the president’s decision to impose 25% tariffs on vehicles made in Canada and Mexico and sold in the U.S. I’d liken GM and Ford to the proverbial orphan who kills his parents and then pleads for mercy because he’s an orphan.
What has gone unnoticed, and I suspect Trump is clueless about, is that while GM and Ford were expanding in Mexico, foreign manufacturers have been building plants in the U.S. and using more American-made parts than GM and Ford.
Cars.com every year publishes its rankings of the most American-made vehicles. The rankings aren’t based solely on where a vehicle is manufactured, but incorporates other critical considerations such as parts content, engine and transmission origin, and U.S. manufacturing workforce. More than 400 vehicles from the 2024 model-year were analyzed to qualify for the top 100 list.
Honda and its luxury Acura brand captured nine of the top 20 spots, Toyota and its luxury Lexis division captured four, and Tesla had three. VW’s electric ID.4 was the third most American-made vehicle, while Europe-based Stellantis’ Jeep and Dodge divisions each captured individual spots.
Not one GM or Ford vehicle made the top 20.
In all the doom and gloom coverage about the adverse impact of Trump’s tariffs on the automotive industry, few publications picked up this Reuters scoop that Honda has decided to produce its next-generation Civic hybrid in Indiana, instead of Mexico, to avoid potential tariffs on one of its top-selling car models. Honda’s 1.3 million-square-foot plant in Greensburg, about an hour southeast of Indianapolis, builds the Civic Hatchback, CR-V and Insight Hybrid. The plant employs 1,700 workers.
Honda’s 4-million square-foot plant in Marysville, Ohio, is where the company builds the Honda Accord Sedan and Coupe along with the Acura TLX and ILX for customers in more than 100 countries around the world. Honda employs 15,600 workers in Ohio.
As an aside, Honda transports Ohio grown soybeans to Japan in cargo containers it uses to ship motorcycle parts from the country.
Toyota’s U.S. footprint
Toyota’s U.S. footprint is even bigger. The company employs more than 176,000 workers across 10 plants in the U.S. More importantly, it has committed to investing more than $20 billion on its electrification efforts in America, and unlike GM and Ford, hasn’t backpedaled on any of them.
Indeed, Bloomberg reported that Toyota last month agreed to shift a $1.5 billion order with LG Energy Solution to bolster operations at a Lansing, Michigan, battery plant after GM backed out of the project. GM and LG were granted $186 million in Michigan incentives for the Lansing project.
Ford significantly scaled back a Michigan battery plant for which the company received more than $1.7 billion in government incentives.
Japan-based automakers manufacture more than three million vehicles a year in the U.S., generating some 500,000 jobs directly in factories and dealerships. While Toyota and other Japanese automakers exports vehicles to the U.S. without paying prohibitive tariffs, it’s unlikely Trump would want to trigger a trade war with Japan.
That’s because Japan is far and away is the top foreign direct investor in the U.S., approaching a cumulative total of $800 billion, Barron’s reported. Moreover, Japan imports virtually all its fossil fuels, and could help satiate Trump’s ambitions to export more, particularly natural gas.
Toyota would likely benefit if Trump, as expected, does away with Biden’s EV incentives, which provided as much as $7,500 tax credits on electric vehicles, even if they were manufactured in Mexico. That likely will further increase the popularity of hybrids, which are more profitable and a segment where Toyota is the undisputed leader in sales and technology.
Toyota hasn’t been immune to the epidemic of recalls, but the automaker still enjoys a reputation for reliability, which could increasingly become a factor in the vehicle choices of U.S. consumers. S&P Global Mobility predicts that in the first half of this year auto lease returns will plummet, removing as many as one million vehicles from the used car market, potentially exacerbating already soaring prices because of the supply curtailment.
The corporate media has been sounding the alarm that new car prices could rise as much as $12,000 because of Trump’s tariffs, oblivious that most Americans can’t afford new vehicles and that used car sales in the U.S. are more than double new vehicle purchases. A vehicle’s perceived long-term reliability impacts its value.
Most reliable
Consumer Reports last year issued its first-ever reliability rankings for vehicles between five and 10 years old. Toyota and its luxury Lexus brand left their rivals in the dust. Not surprisingly, Ford ranked last given that even its new vehicles are notoriously problem plagued.
Toyota is far from perfect, but of all the major automotive companies, I perceive them as ethically superior. I also admire Toyota for not letting politics or the corporate media dictate its business decisions. Toyota took a pounding for refusing to initially embrace electric vehicles, arguing correctly that Americans weren’t ready to embrace them and that hybrids were more suitable in the short term.
Weeks ago, I had an opportunity to interview one of Toyota’s top Michigan executives and the No. 2 engineer for the Toyota Tacoma, a vehicle I’ve long dreamed of owning but can’t justify. Both were from the Midwest and had been with the company for more than two decades. I was taken aback by their humility, their respect for their colleagues, and their corporate loyalty. Unlike veteran GM employees who fear early morning emails notifying them they’ve been fired, experienced Toyota workers focus their entire efforts on making great vehicles.
As I predicted, Trump will quickly back off his impulsively-imposed tariffs given the downturn in his beloved stock market. Bloomberg reported that’s already in the works. It’s to Toyota’s credit that regardless of what the president decides, it won’t materially impact Toyota’s business plans or decisions.
Ford is not only an industry leader for recalls several years running, it also has pioneered a new class of recalls: The recall recall. These are recalls on repairs that Ford did on vehicles it previously recalled.
The latest involves 272,817 SUVs, including the 2021-2023 Bronco Sport SUV and 2022-2023 Maverick pickup, because a 12-volt battery defect could cause the vehicles to lose power while driving. Both vehicles are manufactured in Mexico.
A lawsuit maintains that replacing the battery won’t fix the problem. Edward Benson filed a lawsuit in Pennsylvania seeking class action status on behalf of himself and other Bronco Sport and Maverick owners alleging that the Bronco Sport and Maverick pickup have a “defective” design issue related to an internal weld and cast-on-strap (COS) that’s susceptible to failure and potentially causes sudden power loss and stalling.
Benson’s lawsuit alleges that replacing the battery is “an ineffective waste of time,” and that “there is no true fix for the defect.” The lawsuit alleges that if Ford can’t fix the underlying design defect, the value of the affected Bronco Sport and Maverick vehicles will be irreparably harmed.
Ford increasingly has relied on its engineers in Mexico, where the company in 2022 opened a $260 million “global technology and business center” on the outskirts of Mexico City.
The trade publication Ford Authority reported in 2022 that Ford’s engineering operations in Mexico, the largest in Latin America, experienced a 900 percent growth in personnel from 2010-2022. The publication reported Mexican engineers were “significantly involved” with the Ford Bronco Sport, and that over 70 percent of the vehicle’s engineering took place in Mexico.
Nine Mexican engineers reportedly worked on instrument panels for the 2022 Ford Expedition and 2022 Ford F-150 Lightning, according to Ford.
“Ford Mexico’s Engineering Center has evolved so much in recent years that we have become a fundamental arm for the company’s global projects,” Marcos Pérez Oyamburu, former director of product development at Ford of Mexico. “For many years, we thought that Mexican talent was mainly related to manufacturing, but today, we have shown that we are equally or more valuable (emphasis mine) than the design engineers in countries like Germany, Australia or the United States.”
Companies are required to disclose where a vehicle is manufactured. Perhaps it’s time to disclose where it was engineered.