Sunday, September 30, 2007

How American is the Mustang car ?

If you are in need of a new set of wheels and you happen to believe strongly that it is preferable to spend your hard earned money (cars are the second most expensive purchase that a typical American makes during a life time) on an automobile manufactured by an established US company then most likely you will avoid the Toyota Siena in favour of that traditional American legend the Ford Mustang. That would be a wrong decision.

The most common way to classify automotive vehicles by country of origin is to find out the country with the most value added attributed to it. Once such a simple exercise is performed on the above two vehicles of choice the results will blow you out of the water. They are actually border on being shocking. The Toyota Siena is assembled in the USA and the final value added for this mini van that is attributed to the US is a staggering 95%. The Ford Mustang on the other hand, is also assembled in the USA but the final tally shows that only 65% of the value added is done by US manufacturers.

What is truly paradoxical and difficult to explain is the fact that Toyota appears to be selling vehicles that are totally made in the US at a profit while Ford, Gm and Chrysler are downsizing their US operations, expanding overseas and yet are not even in the same league as Toyota. Global integration, product design and manufacturing philosophies have changed the rules of the game. Toyota manufactures in the US at a profit and gains market share while Ford out sources to less expensive countries, loses market share and operates at a loss. I would still buy the Mustang. It’s sportier:-)

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