The Truth About "America's" Small Car Comeback

With new compact and subcompact models from Ford and GM enjoying respectable sales, the mainstream media has been indulging in some “feel-good” headlines, like the New York Times’s Detroit’s Rebound Is Built on Smaller Cars, or CBS’s more equivocal Can small cars rebound U.S. auto industry? It’s an understandable instinct, as the media has long battered Detroit’s inability to build competitive compact and subcompact cars, and in the post-bailout atmosphere of redemption, these headlines definitely help reassure Americans about the value of their “investment.” Unfortunately (if unsurprisingly), however, these pieces gloss over the full truth of the situation. Yes, Ford and GM are enjoying improved sales success with small cars. The “U.S. auto industry,” on the other hand, isn’t actually getting all that much out of the situation, beyond some fluffily positive press. Here’s why:

Final assembly, as many know, is just one way in which to measure the impact of a given car on the thousands of firms that make up the U.S. auto industry. Some cars which the MSM are highlighting as perception changers for “Detroit” and “the US auto industry,” like the Ford Fiesta (or the Cadillac SRX compact crossover), are not built in the US at all. But even those that do are hardly any more American than strong-selling nameplates that have been built in America for years. To understand how this can be, it’s important to understand “content mix,” or the percentage of US/Canadian origin in each vehicle. Luckily Car & Driver publicized 2010’s NAFTA-area domestic content mix by model, in a PDF that you can download here.

What that data shows is that most of the cars that are being most closely associated with the “American Small Car Rebound” are not, well, all that American. Fiesta and Chevrolet’s Cruze are perhaps the most widely-referenced “perception-changing” Detroit small car, and yet both are average or worse when it comes to US/Canadian content mix for their segment. A Honda Civic made in Indiana, for example, uses considerably more North American-sourced parts than either the Cruze or its even-more-lauded Volt platform-mate. Nissan’s Mexican-made Versa has more North American parts content than any other NAFTA-made subcompact. In short, the Detroit firms may be selling more domestically-branded small cars, but they’re hardly breaking new ground in terms of selling high-domestic-content compact and subcompact cars… yet.

The good news is that this situation should improve in some cases. GM’s 2% North American Aveo will be replaced later this year by the Sonic, a 65% NA content subcompact, built in Michigan. Ford’s new 2012 Focus appears to keep its high domestic parts content mix, apparently improving over its predecessor by one percent for a segment-leading 85% North American content. On the other hand, Dodge is getting a new Fiat-based replacement for Caliber soon, and a relatively rapid homologation could mean much lower domestic content there.

In any case, though Ford and GM’s sales numbers show improvement in the small car arena, America still has a long way to go before it’s a small car manufacturing hub. Furthermore, the improvements in Ford and GM’s small car sales still aren’t having as much of an impact on the “real US auto industry,” the thousands of parts suppliers and related firms across the US, as the mainstream media’s narrative implies. And the most-hyped cars, in particular, still don’t match the North American parts content mixes that transplants have been achieving for some time.