Buying a Car: Is It Wrong to Buy Foreign?

Failure is only the opportunity to begin again more intelligently.

~ Henry Ford

Update: This article was featured in the Carnival of Money Stories – Starting a Sideline Edition posted at The Financial Blogger. Thanks!

If only the government had followed the advice of Henry Ford when it came time to decide whether or not to let GM and Chrysler fail. I recently made the case that a failure to fail has made a pretty big contribution to our current financial problems and I pointed to the auto bailouts as an example of this unhealthy trend. I live in Windsor, Ontario, traditionally a huge employment centre for the big 3 automakers. Mr. Cents and I both grew up here. We lived in various parts of the GTA (Greater Toronto Area) for about 5 years, but returned home 12 years ago. (Has it been that long already?)

Unions carry a pretty big stick in this city. Many of my relatives, neighbours, and friends are directly or indirectly employed in (or retired from) the auto industry. There is a prevailing, if somewhat shaken, support for unions in general and the CAW (Canadian Auto Workers) specifically. Many people here support the idea that we should all buy vehicles made by GM, Ford, or Chrysler.

Out of a Job Yet? Keep Buying Foreign.

I’m not sure what it’s like where you live, but I can’t hit the road in Windsor without coming face to face with numerous bumper stickers carrying slogans like the one in the title of this section. I felt terrible when the financial crisis hit and decimated our local economy – not that you couldn’t have seen it coming the way the auto industry was proceeding.  A lot of folks here were out of work for a long time while Chrysler and GM were in bankruptcy.

Still, I can’t help but feel upset when I see those bumper stickers. After all, the majority of us don’t have the inflated wages or gold-plated benefits and pension packages that many of these employees enjoy. Further, our tax dollars have gone to bailing out GM and Chrysler, as well as the jobs, benefits, and pensions that go with them.

A lot of other people lost their businesses and jobs. They received no government loans. They have no pension. And now, as these big 3 supporters drive down the road in their subsidized vehicles, they also want to tell us which car we should buy – or else.

That doesn’t sit well with me. I’m sure I’m not alone, but it’s not advisable to make opinions like that known in these parts. You can become persona non grata (or worse) pretty quickly.

Still, there are those, even in this city, who draw a direct line from the government loans given to Chrysler and GM, to the growing government deficits and debt, to the new HST here in Ontario. They see it as no coincidence that, less than 2 years after the auto bailout, they are being hit with increased expenses as a result of the Harmonized Sales Tax, which went into effect in Ontario on July 1st, 2010. Oh Canada.

What’s a Foreign Car?

I guess the idea is that we should support our local economy by buying domestic vehicles. But what is a domestic vehicle? What if your GM car is built in Mexico? What about a Toyota that’s built in the southern U.S., or even a few kilometres down the 401 in Woodstock, Ontario? What if it’s assembled here, but all of the parts come from offshore, or vice versa? What about the fact that Chrysler is mostly owned by Fiat (an Italian car maker)?

I actually do like the idea of supporting local businesses whenever possible. But I think I would be more likely to buy their products if I actually felt like they were superior to the alternatives. I’m less likely to want to support a company with a history of shoddy management which I already support through generous government loans, or one that uses coercion or veiled threats to get me to buy.

Should I patronize a restaurant owned by a friend even though the service isn’t very good and I don’t like the food? The whole idea of capitalism is that the cream is supposed to rise to the top. If your company makes a product that suits my needs at a price I can afford to pay, and offers consistently higher quality and service, I’m going to buy from you rather than your competitor. If your competitor offers the better product, service or experience, I think I should be free to buy from them without a guilty conscience.

Do you think it’s wrong to buy a car from anyone but the big 3? Does it factor into your purchase decision at all?

Written by Kim Petch

20 Responses to Buying a Car: Is It Wrong to Buy Foreign?

  1. Once upon a time, there was such thing as a domestic and a foreign car. Now Toyotas and Hondas have more American content than many “domestic” vehicles. And how quickly people forget that Chrysler was bought out by Daimler.

    • 2 Cents says:

      Good point David. The line between foreign and domestic seems to get blurrier every day. Maybe that’s a good thing. Now, we can choose the vehicle that suits us best without feeling like we’re putting our neighbours out of work in the process! ;)

  2. David hit the nail on the head… The origin of the vehicle company doesn’t mean it is “foreign.”

    • 2 Cents says:

      Since there seems to be a consensus that GM, Chrysler & Ford are not necessarily domestic, I wonder why these people with the bumper stickers think we have to buy their vehicles other than pure self-interest.

    • Tim says:

      Yes it does still make it a foreign vehicle. Toyota is based in Japan and the money spent goes back to Japan. I dont agree with the bailouts as normal middle class citizens have gotten no relief in these hard times, but make no mistake a Toyota, Honda…etc is a foreign vehicle. We stimulate their economy every time we purchase a vehicle regardless of the jobs created by the factories. #dodgeram

  3. If anything, all things being equal you’re doing more for global welfare if you buy foreign.

    When GM, Ford, and Chrysler* play to consumers’ sense of patriotism, or localism, they’re essentially saying, “Sure, if country of origin were irrelevant, those Japanese cars would surpass ours. But it isn’t. So buy our cars, and just accept their inferiority as a cost of keeping your neighbors employed.”

    If enough people buy the most efficient cars (by price I mean, not by fuel economy), the companies that make those cars will benefit from economies of scale, enabling them to produce even more cars at competitive prices. Meanwhile, their bloated competitors will wither. If GM were to go under (a political impossibility, it seems), its thousands of workers wouldn’t spend the rest of their lives sleeping under bridges. They’d be free to work elsewhere, in industries in which our part of the world actually has a competitive advantage. And there are plenty. Nowhere in the Canadian Charter of Rights and Freedoms is there any mention of a right to be an autoworker.

    Letting GM and Chrysler rightfully die would have been the best thing imaginable for the auto industry. Again, people need cars and skilled workers to make them. Had GM and Chrysler folded, their competitors couldn’t have bought their factories and other assets quickly enough. The profitable auto manufacturers would have seen their market share increase. It’d be a transition, sure, but how is that worse than screwing over taxpayers who had nothing to do with the suicidal union deals signed with the UAW/CAW?

    *You can’t really call these the “Big 3″ anymore, seeing as Toyota sells far more vehicles than Chrysler does.

    • 2 Cents says:

      Since this is the second time already that Chrysler has “needed” a bailout, you would think that our fearless leaders would be busy formulating plans to allow them (or GM or any other failed corporation) to unwind in a more orderly fashion when they inevitably blow themselves up again. Raise your hand if you think they are actually making any kind of preparations. Anyone? Anyone?

      Thanks for your comments Greg. I couldn’t agree more.

  4. I might be persuaded to buy locally for low-cost items, but I’m not going to buy a bad car when I can get a good one. The maintenance costs of a bad car over its lifetime are enormous. Couple this with the inconvenience of sitting at the side of the road with a dead car and it becomes obvious that I should buy the best car available. Fortunately, I don’t live in an area dominated by people trying to threaten others into buying bad cars.

    • 2 Cents says:

      I’m glad you’re not dealing with bumper sticker bullies in your area Michael. I don’t mean to criticize my hometown. I just look at this city and I think we could be so much more given our geographic location. There are quite a few intelligent and artistically talented people here. Unfortunately, many of them end up using their talents elsewhere. We could easily become a centre for technology, education, and the arts. But alas, we are only known for unions, strip clubs and the casino. :(

  5. I had a company car (from my employer) which was a Ford Taurus. Made in Canada. I bought a car of my own a few years ago. A Toyota. Made in the US.

    What counts more, where the car is made or where the company headquarters is located? My gut says that it’s more important who is employed by my purchase. There’s something wrong with every US worker working for a foreign company, but that’s step or two better than US companies building overseas 100% and letting US workers go unemployed.

    That Toyota stock? It can be held by anyone. Who cares where they are based?

    • 2 Cents says:

      Again, it comes back to quality. If a car company makes a better product, it should sell more cars and enjoy a higher multiple on its stock price (assuming it’s publicly traded). Everyone benefits when healthy companies thrive. Very few benefit by repeatedly rescuing failed enterprises, and in the end, these bailouts do more harm than good. GM & Chrysler bondholders got clobbered in the “restructuring package”.

      I hope you enjoy your Toyota, although I guess they’ve had trouble of their own over the past year. Still – no bailout money required. Thanks for your comment! :)

    • jim kielczewski says:

      Abig thank you from the auto workers from Japan and Korea for sending not only thousands of tax dollars but also jobs over to us.

  6. Isn’t the argument really buy from a union shop regardless of whether it is domestic or not? It is always a slippery slope when you are buying to support something rather than because it fits your needs the best. Even if you bought a car made elswhere, you still need to service it locally so there are spin-off effects regardless but mostly to non-union places.

    • 2 Cents says:

      Yes, I guess it is a union thing. In the long run, companies that are supported by anything but genuine demand for superior products will fail or become zombie corporations if they receive repeated taxpayer support.

      Thanks for your comment!

  7. Bob T. says:

    For those of you defending foreign car companies by saying that American cars are made of foreign parts or foreign cars are builte here, do you not understand that when a foreign car is sold in the U.S. the profits from that sale go back to the foreign manufacture. That is more $ than the sum of parts purchased abroad ! As for your inferiority complex, American cars have been made just as well for the past 6-7 years .

  8. Art Helbig says:

    I absolutely agree with buying from the big three. I am originally from Detroit and would consider purchasing no other vehicle but a Ford product – might I remind you they did not accept any “bailout” money. I firmly believe in supporting companies that not only produce superior products but also whose business practices closely relate to one’s own ideals. In today’s current market place in is more important than ever before to spend your money as a vehicle to vote, encourage economic growth, and uplift one’s own community. I only wish for the day in which automakers could truly be 100% made in America parts/labor/all because the American Public comes to an understanding of how important that concept is and supports it.

    • 2 Cents says:

      I respect your wish to buy a domestic vehicle, and I certainly agree that Ford has been a superior performer by just about any metric. The article was simply meant to make the case for respecting someone else’s choice to buy a Nissan, Hyundai, Toyota, or Honda if that’s the car they want. We live in a global economy now, and that reality means that a “foreign” car might have just as much domestic content as one manufactured by the big 3. If we start mandating domestic purchases, we are no longer a free market economy or a democracy.

  9. 101st screaming eagles says:

    Okay so a Bmw or toyota or a kia is made in usa. Where does the majority of that money go? Not the US. I have 4 cars GM and Ford because not only are they better vehicles, they also support US jobs and growth. The only part of american vehicles I dislike are the worthless union employees that work there. Dosent mean they make a bad car their just waaay overpaid. Sorry you cant include honda and toyota in the same sentence as quality. Computer issues causing unwanted exceleration and a long list of recalls. Cheap junk. Next time there is a minor hail storm go in the parking lot to see which cars have the most damage. Cheap foreign cars with thin sheet metal.

  10. jacobw says:

    I don’t see how it can make a difference other than which one you like best, if u have ever been to Asia us know that they have a shit ton of fords there so its fair and imports have several plants here creating jobs plus if u want proof ur “American” cars aren’t made in America I can give u a couple examples Ford probe is the same drivetrain and everything as a Toyota celica. Dodge stealth is the same thing as a Mitsubishi 3000gt if you know anything about dodges you’ll know what DSM is and the big bad Chevy duramax pickup is made by Isuzu haha and this is just a few theres a lot more examples! But I promisr if you pop the hood there imports and I’d like to see any American car run as long as a Honda lol

Leave a reply

Name: Email: