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Chicago Fed Letter, No. 243, October 2007
Whose Part Is It?—Measuring Domestic Content of Vehicles
The U.S. motor vehicle industry has become more international and competitive over the last few decades. Foreignowned carmakers have a sizable presence in the U.S. market through their sales and production operations, and domestic carmakers import some vehicles for sale in the U.S. market. In the wake of increased competition in the industry, Chrysler Group, Ford Motor Co., and General Motors Corp. (GM) are no longer referred to as the “Big Three” because their market share of U.S. vehicle sales has been much diminished; the U.S. market share of these carmakers, now dubbed the “Detroit Three,” fell below 50% for the first time in July 2007. While these changes have occurred, the U.S. motor vehicle parts industry has also become more international: Domestic carmakers rely more on imported parts, foreign carmakers increasingly use parts that were produced in the U.S., and foreign parts companies have established production operations in North America. In 2006, about 25% of parts used in the U.S. were imported, and approximately another 25% were produced by U.S.-based operations of foreign parts makers.
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