Why does it seem like everything gets outsourced, but building cars keeps getting insourced?

[miri]

?

 

[iamwiz82]

importation taxes, shipping and transportation, hassle, time.

This isn't a phone call travelling through a wire, it's a 1.5 ton vehicles that's 13 fee long.

 

[Sex Smurf]

because the world loves low quality products.

 

[Jumpem]

It's cheaper to build a car here than ship it across the Pacific.

 

[miri]

Do American car companies pay a import tax on the cars they build in Mexico and Canada?

 

[thomsbrain]

Originally posted by: Jumpem
It's cheaper to build a car here than ship it across the Pacific.

 

[EatSpam]

Originally posted by: miri
Do American car companies pay a import tax on the cars they build in Mexico and Canada?

No, NAFTA...but they should.

 

[dandruff]

All the parts that dont need high shipping costs are outsourced ... for example take delphi - most of what delphi used to do now comes from china ...

sometime ago CAAS was the hot stock being recommended ...

 

[qaa541]

I think it's because the price of manufacturing the car overseas and then shipping in here in bulk is more expensive than just building it here. I'm sure foreign companies get tax breaks for setting up shop in American and they dont have to pay tariffs for bringing in cars too. Most specialty cars are still being built in their respective countries (such as sports cars) but most mass produced cars like camrys and accords are done here now because shipping the sheer volume of cars here is bottlenecked by the shipping industry.

 

[Jassi]

The car companies follow a rule, "Build the final product in your target market". I am not an economist but there is probably some logic behind it.

 

[radioouman]

GM requires suppliers to have a certain percentage of the parts made in a low-cost labor country.

Nissan, and Chrysler are perfectly content with local suppliers as long as the price is low. (However, they have other strategies to lower prices...) I don't know about Ford.

Toyota has gone to global supply pricing. Therefore, they don't care where the part comes from, but if it is cheaper in Mexico than it is in the US, they will require that US company to match the price that they can get it for from Mexico. Honda is moving towards this, but they certainly aren't there yet.

 

[91TTZ]

The reason is due to levies, not shipping costs.

 

[PlatinumGold]

shipping a Car is a bit more expensive than emailing code.

it might not be the only factor but only a fool would say it's not a factor at all.

 

[Phoenix86]

Originally posted by: 91TTZ
The reason is due to levies, not shipping costs.

Actually, it's both, since they are both costs assicated with offshore (off continent) production, though levies may be a bigger cost.