I suggest you go look at who the shareholders are of each company. GM has many foreign investors, and quite a lot of American banks and pension plans own (say) Toyota stock.
The shareholders are the ‘owners’ of the company and are where the profit is going in the end. Not some building in Detroit or Tokyo.
Let me point something else out to you - the more percentage of parts that are gotten from domestic sources, the more money the company is putting into the US economy. Period. Car profits are a fairly small percentage whereas parts costs and labor to assemble are the majority of the price. Fact. And in the case of a “domestic” company that’s selling a car made elsewhere made out of foreign parts, the math gets interesting.
Let’s say that (to make the math easy) 80% of the price of a $20K truck is parts and labor cost to produce it (it’s actually more than that, usually, but let’s leave that for now) leaving 15% for overhead and 5% for profit. Just to make it simpler, let’s say that labor costs are combined with parts costs. Then consider the following.
Company A is “headquartered in America and was started by an American.” But their $20K truck is assembled in Mexico out of mostly Mexican parts by Mexican workers. Only 46% of the parts are from the US.
Here’s the breakdown - $20K truck, $16K parts/labor cost. $9200 stays in the US and gets distributed to the American working man and woman. $1000 goes off to the shareholders (simplified) and they’re often faceless multinational banks or foreigners.
Company B is from, oh, Japan. They have their $20K truck assembled in, oh, Texas, by American workers and they source 80% of their parts from the US.
Same $20K truck, same $16K parts/labor cost. $12800 stays in the US and keeps bread on the table for the working man and woman. Same $1000 profit, same people it goes to - sometimes Americans, sometimes not.
Are you seeing the problem here?
Cruze’s parts content window sticker: http://blog.truecar.com/wp-content/uploads/2011/12/chevrolet-cruze-eco-parts-content1.jpg
Altima’s parts content - 98% USA:
http://www.thedetroitbureau.com/2012/05/new-nissan-altima-is-an-all-american-car/
Whatever.
They pay US taxes on the profit. And then again on the dividends.
Defend it any which way you want.
Either you want as many jobs and corporate money in the US, or you do not.
But I am sure that goes into your purchasing decisions.
And your 5% margin is a little light.
GM had a 13.9% gross margin in the last quarter.
I appreciate there is a lot of accounting gymnastics involved in an EPS, but 14% isn’t 5%.
