News Column

Auto Exports From US on the Upswing

April 3, 2012

Patrick Olsen,

As the auto industry regains its footing here, automakers both foreign and domestic are exporting more cars from this country than they were five years ago and plan to dramatically expand exports in the next five years.

Excess plant capacity, currency exchange rates that effectively lowered U.S. labor costs, quality and free-trade pacts have combined to make the U.S. a more attractive place to assemble cars for sale elsewhere.

With a slow car market here in the past couple of years, capacity at U.S. plants was hardly being reached.

"One way to fill that capacity is to build cars for overseas," said Ed Kim, director of industry analysis at AutoPacific. "It's a smart allocation of resources."

Also, Kim says, "there are currency issues at play here." With the yen strong compared with the dollar, it makes sense for Japanese automakers such as Nissan, Honda and Toyota to ramp up production in the U.S. "We are a low-cost manufacturing zone at the moment," Kim says. "That makes building here attractive."

Exchange rates, of course, can change. "Could something crazy happen to change the equation? Yes," says Kim. But, "based on where things are now," exporting from the U.S. "definitely seems to be the right move for automakers."

Nissan exports its U.S.-built models to 46 foreign countries and U.S. territories, said David Reuter, vice president of corporate communications for Nissan Americas. "The No. 1 exported product is the Nissan Altima, with major destinations being Canada, Mexico and the Middle East."

A redesigned 2013 Altima will be unveiled this week at the New York International Auto Show, and Reuter expects it to boost exports from the U.S.

"In the next two to three years, (Nissan) will nearly triple the volume of vehicles exported," he said. "The number of destinations will more than triple, as well. This will be fueled by the next-generation Altima, the Nissan Leaf, Nissan Rogue and (the recently introduced) Infiniti JX."

Domestic automakers are feeling bullish on exports, as well. "While GM's operating philosophy is to produce where we sell, we still have a substantial export business," said spokesman Brian Goebel. "In 2011, we exported more than 275,000 vehicles, and our exports have grown substantially over the past five years."

Other automakers exporting from the U.S.:

Mercedes-Benz's plant in Tuscaloosa County, Ala., built 148,092 SUVs last year, says communications manager Felyicia Jerald, and nearly two-thirds were exported to more than 130 countries.

Toyota exported 85,000 vehicles last year from its various U.S. plants.

South Korean automaker Hyundai is sending nearly 50,000 Sonatas and Elantras from its plant near Montgomery, Ala., to Canada and to Puerto Rico, a U.S. territory, each year, says plant spokesman Robert Burns.

Hyundai corporate sibling Kia exports about 9.5% of the Kia Optimas and Sorentos and Hyundai Santa Fes it builds at its West Point, Ga., plant says spokesman Michael Ofiara.

Jeep is Chrysler Group's "truly global brand," says spokeswoman Michelle Callendar, and foreign sales were 172,849 in 2011, up 17% from 2010. Most of those were exported from the U.S., although the total includes some built in Egypt and Venezuela, "mainly for the local markets," she says.

While many foreign locales still offer cheaper labor, it can be hard to maintain quality standards expected in today's auto markets.

"Quality is no longer a nice-to-have." says AutoPacific's Kim. "Now, it's the cost of entry."

That gives the U.S. an edge. "The quality that comes out of the U.S. is equal to the best in the world," Kim says. "There's a very, very consistent quality for cars you get from here."

Further boosting U.S. exports may be trade deals, such as the recent pact with South Korea.

"We anticipate continued growth (as) the U.S. implements new trade agreements," GM's Goebel says.

"Given our recent announcements of Sienna and Camry exports to South Korea, along with other possible achievements in the future, we plan to continue boosting exports from our U.S. operations," Toyota's Javier Moreno says.

Says Kim, "With the free-trade agreement, U.S. vehicles will have an even greater price advantage than other imports" into South Korea.

Source: Copyright USA TODAY 2012

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