Issue: Mar 2003


Windecker



North American Economics

by Ray Windecker

A continuing reality of the American automotive industry is that we, who inhabit the industry, will fret about the economy. When the economy is in decent shape, we worry about a possible downturn, when things are bit uncertain, as they are now, we flail at the market with unprecedented programs aimed at keeping momentum at the reasonably crisp pace. In the end, we live with and often thrive during periods of economic uncertainty.

A second reality of the American automotive industry is a seemingly overwhelming desire to give and receive awards. Organizations of every stripe and type give out an endless stream of automotive awards, some based on quality surveys, some on customer reactions, some for perceived value and some on the subjective and personal whims of what someone deems as attractive styling.

Recently, a panel of automotive writers awarded the North American Car of the Year award to the Mini, a specialty car designed by German engineers and built in England by German company. The companion Truck of the Year Award went to a Volvo crossover that was designed primarily by Swedish nationals and built in Sweden by an American company.







 
If truck buyers had the vote, the Ford F-150 would be the hands-down winner as North American Truck of the Year.
These awards were presented at the 2003 North American International Auto Show, receiving considerable media attention. At the risk of second guessing and sounding a bit churlish, these are good, limited volume vehicles that appear to have only a tenuous relationship to North America. Would not they more properly be anointed as winners of an international award, thus leaving the door open for an award to a true North American vehicle?

The two realities, economic jitters and the giving of awards, converge on a third reality: there is a true North American vehicle produced in staggering quantities in the United States, Canada and Mexico that deserves an award as the 2002 North American Economic Vehicle of the Year.

The award-winning vehicle is the Ford FSeries, based on 2002 U.S. production of 827,500 vehicles and U.S. sales of 813,700. Additionally, there were 139,300 produced in Canada and Mexico that contained U.S. content. The economic contribution to the 2002 S. economy was $23.5 billion.

We often see the economy as an abstraction somewhere beyond our own paychecks and personal expenses. To many people the economic value of a vehicle is often an abstraction, as the value can begin in the murky recesses of a nameless foundry that pours the casting that is part of the machine that digs the coal that fuels a steel mill furnace. Also, the economic value of office buildings and plants are obscure, but real.

More obvious are the engineers and assemblers housed in those buildings. Components, freight and labor are obvious, but hundreds of other pieces of the process are not, even though all contribute to the total vehicle value. Those vehicle values can be controlled and summarized for U.S. production as the per-unit, taxed, sales-weighted transaction value less non-local content. For Canadian and Mexican production, the values reverting to the United States are hard and soft good inputs into those countries from U.S. sources.

Through a combination of massive production, primarily in the United States, the Series is the economic champ of the North American vehicle market. Based on production data and assumed similar price and content values, the Chevrolet Silverado series would be a soft second due to lower production, particularly in the United States. As a yardstick of other high-volume products, the 2002 top-three North American truck and car production data are graphically detailed.

The F-Series, clearly the production and economic gorilla of North America, is thus annointed as the winner of the 2002 North American Vehicle Economic Award. Sorry Ford, there is no presentation or trophy, only this recognition.






























F-SERIES 2002 ECONOMIC VALUE
Producing
Country
2002
Production
U.S. Economic
Unit Value
Total Economic
U.S. Value
U.S. 827,500 $27,100 $22,425,200,000
Canada 107,400 $7,100 $762,500,000
Mexico 31,900 $9,800 $312,620,000
Total 966,800   $23,500,320,000













































2002 NORTH AMERICAN PRODUCTION
  North American
Production
U.S.
Production
Percent
U.S.
Trucks
F-Series 966,800 827,500 86%
Silverado 742,100 497,100 67%
Explorer 485,800 485,800 100%
Cars
Taurus  375,200 375,200 100%
Accord 361,300 336,200 93%
Camry 354,100 311,600 88%
Source: American Autodatum

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