Kogod auto index

Non-repair car talk
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kevm14
Posts: 16024
Joined: Wed Oct 23, 2013 10:28 pm

Kogod auto index

Post by kevm14 »

I can't believe I never posted this before.

http://www.american.edu/kogod/research/autoindex/
HOW does the Index work?

The index uses seven points derived from publicly available data.

The components of the index are based on research into the economic value of different components of auto manufacturing that was done by the Center for Automotive Research in Ann Arbor Michigan. For example, the highest ranked cars are made by U.S. based manufacturers using American engines and transmissions, and a with a high AALA percentage of U.S. and Canadian parts.

The seven criteria are as follows:
1.Profit Margin - This was measured based on the location of an automaker’s headquarters. If an automaker’s global headquarters is located in the US, the model receives a 6. If it is not, it receives a 0. The assumption here is that (on average), 6% of a vehicle’s value is profit margin, so if it is a U.S. automaker, the profits remain in the country.
2.Labor - This category considers where the car is assembled. If a model is assembled in the US, it receives a 6. If not, the model receives a 0. We assume that approximately 6% of the vehicle’s value is labor content.
3.Research and Development (R&D) - This category looks at the location of a car’s R&D activities. If the model is a product of a US company, it receives a 6. If it is the product of a foreign company but is assembled in the U.S. it receives a 3; if it is a foreign import it receives a 1.
4.Inventory, Capital and other expenses - If assembly occurs in the US, the model receives an 11; if not, it receives a 0.
5.Engine - If the engine is produced in the US, the model receives a 14; if not it receives a 0.
6.Transmission - If the transmission is produced in the US, the model receives a 7; if not it receives a 0.
7.Body, Chassis, and Electrical Components - 50 % of a vehicle’s score is assigned to this category. The AALA percentage is divided into two to derive this score.

In 2014, Fiat acquired the outstanding shares of Chrysler. The new entity, Fiat Chrysler Automotive (FCA), is headquartered in the Netherlands with a tax domicile in London, and shares listed on the New York Stock Exchange. As such, because of the hybrid nature of its organizational structure and its large production and R&D presence in the U.S., we assigned a value of 3 for profit margin and R&D, rather than a 6 or 0.
This is more like it. I understand CR put out some info that was limited to "class winners" which imo paints a picture that is misleading. The method they used was entirely based on whether the car was assembled here, or not. And I understand many Japanese cars racked up "wins" in the class. But assembly is not the final word on how American something is, and the Kogod index does a much better job. Yes, many Japanese cars are STILL more "American" than many American cars and that is something people need to understand. But the way CR presented it just seems like more ammo for the same buyers that prefer safe car choices (i.e. Japanese brands) that already read CR and it just gives them more annoying ammo to be like "Hey Joe, now you have even more reason to buy that Camry."

Anyway, the Kogod index seems to do a much better job and the best part is you could actually change the weighting system yourself and rank for what you think is important. It should go without saying (yet it doesn't) that assembly is just one part of the automotive production chain.
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