LRTDI said:
In comparison to EEC, the US is a very CHEAP labor market. US made cars sold in EEC for example commonly sell for a far higher price than in the US. Go check Jeeps, Chryslers and look for yourself.
The BMW plant is the sole worldwide production location for the X5, X6 and the new X3 that will be introduced shortly. BMW ships all engines etc to SC from Germany then exports the car with these same engines installed. So there are many BMWs out there whose engines have travelled from Germany to the US and back again, before seeing a dealership.
As for Honda, Honda builds the Civic, Accord (all variants) Pilot, MDX, Odyssey in the US.
I don't think those higher prices on autos in Europe are due to labor cost. Labor cost in the US is responsible for loss of tire-, textile-, auto-, electronics-, steel-, furniture-, tool-making industries, uh... I think I can stop. Point is made. And please look at the price of the X5, X6, and new X3. The cars are loaded with features, so they can charge enough to pay for the labor market. VW sells more lower end vehicles.
Specifically...There are many places on the planet cheaper to make an automobile besides EEU. Our Jetta TDIs are from Mexico, a much cheaper labor market for example (and does the word maquiladores ring a bell???). The US is hardly a cheap place to hire people.
But I say again... the reason why Honda makes Accord here, Toyota makes Camry here, etcetra, to avoid import duties...the so-called "chicken tax", which actually goes back to taxes on US chickens back in the early sixties (
chicken tax).
To see how weird it can get, the Subaru brat had rear oriented seats in the bed so that it qualified as a passenger car, thereby avoiding taxes.
North American auto assembly plants are an import duty dodge, but they can be dressed up as partnerships, and we buy the cars, so it makes sense. Unfortunatley, the
TIF give-aways can prevent North American communities from benefiting from these assembly plants. Local governments pay up front (actually borrow, up front) to provide infrastructure, and promise tax breaks. In the case of Chattanooga's long range tax deferrals with VW of America, it seems that increased tax revenues will more than pay for the infrastructure investment and those long term tax breaks. This deal might be very good for Tennesse and for Volkswagen.
But North American workers, like me, are not cheap. In fact, we are notoriously expensive and productive. BUT, to get back to the specific point I made, and stand by... VW will not export vehicles from the new Tennessee plant, besides maybe to Canada (I would be dumbfounded). It is very clearly a great way for VW to assemble vehicles here, avoiding the tax, and being a local hero for hiring people. I wonder just what it cost Chattanooga/Tennessee to get VW to expand and build the new facilities (TIF?). Perhaps a little reality check is in order. Don't get me wrong, it is a good thing, but one should look at the bigger picture as well.
Here is some context:
ONE
TWO
The numbers are staggering. You be the judge.
