Friday, August 14, 2015

More Imports than Ever

The sales for vehicles have been at a high for this year and several factors are why the auto industry has seen such a boom.  There are more vehicles to choose from, gas prices are going down, and the turnaround of the economy more people have the money to buy new vehicles than they have in the past few years.  This should be a good thing for our overall economy and it may be, but we are importing more vehicles than ever which does cause us to send money to companies that are based in other countries which it seems is going to be the case for some of our companies as well.

The imports for this year so far have been at a record $171.5 billion worth which is an increase of $10.8 over last year.  Unfortunately our exports do not even come close to this amount and accounts for over a third of the $43.8 billion trade deficit for the month of June alone which for last year the total vehicle deficit was $169 billion.  What is going on to cause us to be so over imported but for so many of our vehicles to not be exported?

The strength of the dollar and the growing production in Mexico have been blamed for the main factors that have held back the exports from our shores of our vehicles.  In Japan, one of the major exporters of vehicles around the world, the weakness of the Yen allows them to make record profits on vehicles that are exported to our shores and sold here.  Overall, you would think we would want to have a strong dollar value, and we do, but without comparable exchange rates and values on other currencies our export business is going to continue to suffer losses and end up not being able to balance this deficit.

This brings a thought to mind.  First of all Ford has announced they are going to build two factories in Mexico to start production there and Toyota plans to do the same and start building in a factor in the country as well.  This might be an issue that we need to look at on a more global scale rather than one of each country on its own.  Many automakers have started building vehicles in the region of the world they are going to be sold in which helps to reduce the cost and need to export cars using ships and reduced the costs to do this.

With local building from automakers, Toyota and Honda already build in the US, there isn’t as much of an uproar as there was in the 1980s or before to “Buy American”.  The reason for this is the fact that even though there is an imbalance of exports to imports, the American automotive worker who used to only want to work in factories of the “Big 3” in order to feel more patriotic can see the automotive world is more global than ever and has shrunk to the point of being more collaborative than ever.

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