Economic Contribution Analysis Archives - Center for Automotive Research

Economic Contribution Study of Hyundai Motor America’s U.S. Operations

Carolyn Mozheev — Wed, 13 Sep 2023 12:35:00 +0000

The purpose of this study is to estimate Hyundai Motor America’s (HMA’s) and its independent dealer network’s employment and economic contribution to the United States and the economies of the seven states in which HMA and HMA dealer networks have significant automotive footprints. This study also estimates the economic contribution of Hyundai’s new electric vehicle and battery manufacturing investment to the United States economy.

In 2021, Hyundai Motor America (HMA) and Hyundai America Technical Center, Inc. (HATCI) hired 7,050 workers in Alabama, California, Texas, Georgia, Michigan, and other states in the U.S. In addition, HMA’s independent dealer network employed 54,100 workers across all fifty states. CAR estimates HMA, HATCI, and HMA’s independent dealers in 2021 contributed 190,950 jobs in the U.S. economy. Of these, HMA and HATCI’s U.S. automotive operations support 58,250 jobs, and 132,700 jobs are associated with HMA’s 835 dealers in fifty states. HMA and its dealerships added USD 20.1 billion in private earnings to the U.S. economy, including USD 3.0 billion in social welfare contribution and USD 2.8 billion in federal and state income tax revenue.

HMA’s employment multiplier is 8.3—implying 7.3 additional jobs for every employee in HMA’s U.S. automotive operations. HMA’s independent dealers have an employment multiplier of 2.5, indicating 1.5 other jobs created for every HMA dealership worker.

In 2022, Hyundai Motor Group (HMG), a multinational conglomerate that owns Hyundai Motor Company (HMC), the parent company of HMA, announced that HMG, Hyundai Mobis, and SK On will invest an additional USD 10.6 billion into new electric vehicle facilities in Georgia and Alabama, which is expected to hire 13,500 jobs in those states. CAR estimates these jobs will create or retain a total of 62,800 jobs in the United States by 2025. These jobs will generate USD 8.3 billion in private earnings, including USD 1.3 billion in government social welfare funds and USD 1.2 billion in federal and state personal income tax.

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Contribution of General Motors to the Economies of Nine States and the United States in 2019

swhitehouse@cargroup.org — Mon, 24 Feb 2020 14:00:15 +0000

This study estimates the employment and economic contribution of General Motors’ United States operations to the United States economy and the economies of the nine states in which GM has significant manufacturing operations in 2019.

CAR’s estimates demonstrate that General Motors—the largest automaker by U.S. market share and second-largest automaker by U.S. light vehicle production volume—is a significant contributor to the U.S. economy and the economies of the nine states in which GM has manufacturing facilities. Close to 90 percent of the light vehicles GM builds in the United States are also sold in the country. GM is also among the largest investors in the U.S. automotive industry, with a total of $44.3 billion in announced investments in the country since 2000. Over the past 19 years, nearly four out of every five dollars General Motors has announced it would invest in North America have been spent on U.S. facilities.

This report is presented in two major sections: a brief history of GM in the United States, which includes GM’s sales, market share, production, and investments, and the economic contribution of General Motors in the United States and the nine states in which GM has manufacturing operations. Two appendices cover the modeling methods and provide detailed employment contribution results by U.S. industrial sectors.

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Trade Briefing: U.S. Consumer & Economic Impacts of U.S. Automotive Trade Policies

swhitehouse@cargroup.org — Fri, 15 Feb 2019 18:00:12 +0000

U.S. trade policy changes are projected to raise consumer prices for new and used vehicles and lower U.S. light vehicle sales, employment, and economic output. The Center for Automotive Research (CAR) estimates that the cumulative effect of current and potential U.S. trade actions on automobiles and auto parts could cause new car prices to rise by USD 2,750 on average. CAR estimates that the price of even U.S.-built vehicles could increase as much as USD 1,900 due to the current share of imported parts content, and imported vehicle prices could rise by as much as USD 3,700. The vast majority of the estimated price impacts are attributable to the potential auto and parts tariffs that the Administration is considering imposing under Section 232 of the Trade Expansion Act of 1962, as amended.

CAR’s analysis assumes that Canada, Mexico, and South Korea are exempt from potential Section 232 auto and based on the Korea-United States free trade agreement (KORUS) and exemptions from Section 232 auto and parts tariffs for Canada and Mexico that were agreed to in side letters to the USMCA that was signed in November 2018.

Rather than help the U.S. automotive and parts industries, the cumulative effect of the Section 232 steel and aluminum tariffs, Section 301 China tariffs, USMCA, and the potential 25 percent Section 232 tariff on imported autos and auto parts could lead to a 1.3 million drop in U.S. light vehicle sales, 366,900 fewer U.S. jobs, and $30.4 billion lower U.S. economic output (Gross Domestic Product). U.S. new automobile dealerships could lose as many as 77,000 jobs and $43.6 billion in revenue.

Used vehicle prices will also rise due to heightened demand and constricted supply, and higher automotive parts prices will drive up the price of vehicle maintenance and repair, so even holding on to an existing vehicle will become more expensive.

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Trade Briefing: Consumer Impact of Potential U.S. Section 232 Tariffs & Quotas on Imported Automobiles & Automotive Parts

swhitehouse@cargroup.org — Tue, 24 Jul 2018 12:43:21 +0000

The U.S. Department of Commerce is currently investigating whether U.S. automobiles and automotive parts constitute a national security threat under Section 232 of the Trade Expansion Act of 1962, as amended. The Center for Automotive Research (CAR) estimates that consumers will see the price of all new vehicles rise by $455 to $6,875 depending on the level of tariff or quota, where the vehicle was assembled, and whether the policy provides exemptions for automotive trade with Canada and Mexico. Used vehicle prices will also rise due to heightened demand and constricted supply, and higher automotive parts prices will drive up the price of vehicle maintenance and repair, so even holding on to an existing vehicle will become more expensive.

U.S. automotive and automotive parts manufacturers would not benefit from tariff or quota protection since all vehicles produced in the United States rely on imported content and a substantial share of U.S.-produced automotive parts and components are exported for assembly in vehicles built in other countries. CAR estimates that automotive demand will fall by between 493,600 to 2 million vehicles as a result of the implementation of tariffs or quotas. Declining demand is associated with employment losses ranging from over 82,000 to nearly 715,000 jobs and a $6.4 billion to $62.2 billion hit to U.S. Gross Domestic Product (GDP).

This briefing covers the economic, trade, employment, output, and price impacts of the potential Section 232 tariffs or quotas at a range of levels and levied against all trading partners or all non-NAFTA trading partners.

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NAFTA Briefing: Trade benefits to the automotive industry and potential consequences of withdrawal from the agreement

boxcar-admin — Thu, 05 Jan 2017 05:00:00 +0000

The North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico has been in place since January 1994. Continent-wide reduction or elimination of customs tariffs allowed vehicle manufacturers and suppliers to optimize operational structures by locating assembly operations and supply chain manufacturing in best cost location, which helps keep the domestic automotive industry competitive with growing global capacity. NAFTA has attracted billions of dollars of domestic re-investment and new foreign direct investment into the U.S., Canada and Mexico.

President Trump has signaled his intention to withdraw from NAFTA or to renegotiate major provisions of the agreement. NAFTA has contributed to the growth of integrated automotive production and supply networks within the North American region, and significant changes to the tariff structure will have major ramifications for automotive manufacturers and suppliers. These ramifications range from the vehicle makers’ ability to deliver an affordable mix of vehicles consumers demand, to the ability to support supply chain requirements with globally cost-competitive raw materials as well as products that might not have any sources within the United States.

While there are always opportunities to improve the effectiveness —a wholesale withdrawal from NAFTA could set in motion a series of unintended consequences that would constrain future growth of the U.S. automotive industry. This briefing outlines the benefits of NAFTA to the automotive industry, consumers, and the economy as a whole, as well as the potential consequences if the U.S. were to unilaterally withdraw from NAFTA.

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Contribution of Toyota Motor North America to the Economies of Nineteen States and the United States in 2015

boxcar-admin — Thu, 01 Dec 2016 05:00:00 +0000

This study, commissioned by Toyota, estimates the employment and economic contribution of Toyota Motor North America’s operations and activities to the United States economy. The study provides a history of Toyota’s presence in the United States, details on the company’s manufacturing, R&D, and management footprint in the country, as well as detailed results on Toyota’s economic contribution to the U.S. economy in total, as well as the economies of 19 individual states. The economic contribution analysis is based on an advanced model of the U.S. economy, and provides results that include Toyota’s direct employment, resulting supplier and spin-off employment, contribution to payroll, and contribution to the country’s tax base.

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The Economic Implications of Potential NHTSA and EPA Regulatory Revisions on U.S. Light Truck Sales and Manufacturing

boxcar-admin — Sat, 01 Oct 2016 04:00:00 +0000

While there are regulatory provisions that offer some compliance flexibility through credits, credit banking and trading, and technology incentives, it is not at all certain that vehicle manufacturers will meet the regulatory targets for light trucks. With real fuel prices nearing historic lows—and projected by the U.S. Energy Information Administration to stay low through 2025—U.S. regulators must take care during the ongoing mid-term review to set realistic and achievable standards for light trucks. Anything that could dampen the market for light trucks that consumers want to buy would result in large economic and financial impacts in the United States.

Every job in a body-on-frame pickup truck plant or related powertrain plant supports another 14.9 jobs in the U.S. economy, and every light truck sold in the United States generates an average of $6,000 in operating profit for the manufacturers. The economic and financial consequences of stricter light truck regulations would be especially large at FCA, Ford, and GM—companies that have a sales mix that is currently at 72 percent light trucks, and a manufacturing mix that is 76 percent light trucks. However, lower truck sales would not only impact these three automakers, but also BMW, Daimler, Honda, Hyundai-Kia, Renault/Nissan, Subaru, Tesla, and Toyota and the large, long, and heavily U.S.-based supply chain that is completely interdependent in its support of all light truck manufacturing in the United States.

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The Potential Effects of the 2017-2025 EPA/NHTSA GHG/Fuel Economy Mandates on the U.S. Economy

boxcar-admin — Thu, 01 Sep 2016 04:00:00 +0000

This study conducted by the Center for Automotive Research (CAR) constitutes an economic cost benefit analysis of the national standards for light duty vehicle fuel economy (FE) and greenhouse gas emissions (GHG) set by the U.S. National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) for the years 2017-2025. The study estimates the effect of higher fuel economy mandates and the adoption of related technologies on U.S. motor vehicle market, production, and automotive manufacturing and automotive dealership employment in the year 2025. The study also discusses other effects of the fuel economy and GHG mandates on the U.S. economy, and contains CAR’s policy recommendations pertaining to the mid-term review of the national standards for 2022-2025.

Employing the most recent range of gasoline price forecast levels from the U.S. Energy Information Agency (EIA), CAR analyzed nine scenarios using $2.44/gallon, $3.00/gallon, and $4.64/gallon in 2025 dollars and FE/GHG mandate cost levels of $2,000, $4,000, and $6,000 per vehicle. The study finds that the level of fuel prices directly determines the economic effects of 2025 fuel economy and greenhouse gas regulations. If the value of fuel savings to the new vehicle buyer falls short of the cost of mandated fuel economy technologies, then U.S. automotive sales, production, manufacturing, and retail employment will fall, which will result in serious consequences for the entire U.S. economy.

Comment submitted by Center for Automotive Research (CAR)

Submitted electronically to: www.regulations.gov

Docket ID Number: EPA-HQ-OAR-2015-0827

Reference: Proposed Determination on the Appropriateness of the Model Year 2022-2025 Light-Duty Vehicle Greenhouse Gas Emissions Standards under the Midterm Evaluation

Public Submission: 12/29/2016 | Posted: 12/30/2016

EPA-HQ-OAR-2015-0827-6105

Subject: Corrections and clarifications to the various references to the Center for Automotive Research’s The Potential Effects of the 2017-2025 EPA/NHTSA GHG/Fuel Economy mandates on the U.S. Economy as found on pp. A-41 through A-42; A-80 and A-87 and the Technical Support Document, pp. 4-17 through 4-20.

https://www.regulations.gov/document?D=EPA-HQ-OAR-2015-0827-6105

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The Growing Role of Mexico in the North American Automotive Industry – Trends, Drivers and Forecasts

boxcar-admin — Mon, 01 Aug 2016 04:00:00 +0000

Mexican auto assembly capacity is projected to more than double in size between 2010 and 2020. The major reason for this rapid growth is the infusion of $13.3 billion in investment to move 3.3 million units of vehicle capacity from Japan, Germany, and S. Korea to Mexico rather than the movement of U.S. and Canadian capacity. This report highlights North American vehicle production trends, and demonstrates that while automakers and suppliers are attracted by Mexico’s low labor rates, there are many other factors behind Mexico’s growing role in the North American automotive industry.

Combined with lower labor costs, Mexico’s unique free trade position with 40 countries and access to 47 percent of the world’s automotive market provides a significant competitive edge to attract automotive investment that the United States and Canada do not have. Growth in Mexican production volumes, however, can still result in new business for U.S. and Canadian suppliers. Due to well-integrated North American supply chains, vehicles produced in Mexico may be comprised of up to 40 percent U.S. content. In fact, U.S. exports of parts and components to Mexico more than doubled between 2005 and 2014 to a level of $18.4 billion.

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Potential Cost Savings and Additional Benefits of Convergence of Safety Regulations between the United States and the European Union

boxcar-admin — Fri, 01 Jul 2016 04:00:00 +0000

This report examines the costs of divergent safety regulations in the United States and the European Union and highlights the economic impacts of having two different regulatory regimes. With the shift to a to a global-vehicle strategy by most automotive manufacturers, differences in safety regulations in the United States and the EU require automakers to manufacture distinct versions of each vehicle model to conform to the regulatory requirements in each market. Modifications add cost, and the cost of compliance with two divergent regulatory regimes exceeds the cost of tariffs. CAR’s research concludes that two the different regulatory regimes cost the automotive industry $3.3-$4.2 billion per year. Reducing the cost of compliance would benefit consumers through both lower new vehicle prices and more models from which to choose. The report also compares mutual recognition and harmonization as the two most likely approaches for increasing regulatory consistency and, ultimately, achieving cost savings and potential additional vehicle sales

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