Economic Impact

The manufacture and sale of automobiles is a significant component of the U.S. economy. In 2016, the auto industry directly employed approximately 2.5 million workers and generated a record 17.5 million units in total vehicle sales, accounting for approximately 3.5 percent of the U.S. GDP. This represents a slight increase over 2015 sales which was the previous record. Of the 17.5 million vehicles sold in the U.S. in 2016, approximately 65 percent were produced in the United States.

As such an important part of the U.S. economy, understanding the factors that influence the automobile industry is not just helpful—it is essential. A vehicle’s domestic manufacturing composition plays a key role in determining its overall impact on the American economy. This knowledge empowers consumers and automakers alike to make better economic decisions about where a car is made, and which offer the greatest commercial benefits to the country.

Improving the Label

One of the first things a consumer looks at while car shopping is the price and options label.

Since the enactment of the American Automotive Labeling Act (AALA) in 1994, automakers are required to provide information on the label detailing the amount of U.S. and Canadian parts content, the country of assembly, and the engine and transmission's country of origin.

AALA data, while useful, is not the most accurate means of assessing a vehicle's contribution to the U.S. economy. It presents a number of limitations; U.S. and Canadian content are combined into one number, and automakers are allowed to round-up a part that is potentially only 70% U.S./Canadian to 100% U.S./Canadian.

Kogod's method improves on the AALA data by incorporating a more comprehensive research methodology, providing consumers with a more accurate view of their vehicle's composition.