Cars Move America
As the Washington Auto Show opens this month, and consumers see the vast array of vehicle choices on display, the members of the Alliance of Automobile Manufacturers are proud to present new data about the strength of our industry as it continues to help lead the U.S. economic recovery.
Automobile manufacturing is one of the key movers of the economy, and helps drive the 12 percent of U.S. Gross Domestic Product (GDP) that is manufacturing’s overall contribution to the economy. Indeed, it is difficult to imagine manufacturing thriving in this country without the auto sector.
In total, the auto industry is now responsible for 7.25 million private sector jobs, according to a new report by analysts at the Center for Automotive Research. Auto manufacturers, suppliers, and dealers themselves employ more than 1.5 million people, and directly contribute to the creation of another 5.7 million jobs.
Jobs related to the auto industry go far beyond designing, building, and selling vehicles. Automakers in the U.S. are also among the largest purchasers of aluminum, copper, iron, lead, plastics, rubber, textiles, vinyl, steel, and computer chips.
For that reason, the automotive industry has a strong multiplier effect, the CAR researchers found: Each job for an auto manufacturer in the United States creates 7 other positions in industries across the economy.
Automobiles and light trucks also drive another portion of the economy – government revenue at all levels – local, state, and national. Through income and payroll taxes that our autoworkers contribute; the gasoline, sales, and property taxes levied on motor vehicles; along with registration and other fees; cars and trucks generate a huge amount of income for government.
CAR researchers found that the millions of auto industry-connected employees collect almost $500 billion in annual compensation, delivering nearly $65 billion in personal tax revenues to government entities. This figure underscores another recent CAR study, which found that the automotive sector generated at least $110 billion in state government tax revenue and another $96 billion in federal government tax revenue, amounting to about $206 billion in taxes. This is more than the GDP of 142 countries across the globe.
Automobile manufacturing also drives innovation. Our companies invest heavily in research and development, and all but about 1 percent of our annual R&D spending comes from the auto companies themselves. Unlike other industries, which receive considerable government R&D money, we bear essentially the full cost of creating, designing, testing, and implementing new technologies for our cars and light trucks. We spend an average of $1,200 per vehicle on R&D.
This R&D investment helps our companies create, embrace, and adapt new technologies. Indeed, your smartest mobile device is your car or truck, with each vehicle equipped with dozens of microprocessors, and millions of lines of computer code. The R&D investments also help our manufacturers meet the demands of an increasingly diverse and complex market. We have to keep pace with demands from consumers for ever more sophisticated and effective technologies, while also making our vehicles lighter, more fuel efficient, and cleaner. And we have to do it for countries across the globe who have different regulation and safety requirements. Research and development into new technologies helps us meet those demands.
A 50-State Industry
The tremendous change in the automobile industry has also meant that automobile and parts manufacturing is now more of a 50-state industry than ever before. The Midwestern states of, Michigan, Ohio, and Indiana remain home to the highest numbers of automotive manufacturing establishments. But the increase in foreign direct investment by international automakers who have built facilities in the United States, such as BMW, Jaguar-Land Rover, Mazda, Mercedes-Benz, Mitsubishi, Porsche, Toyota, Volkswagen, and Volvo, has meant a spreading of auto investment to many more states including several in the South: Texas, Tennessee, Kentucky, Alabama, and Mississippi in particular. Total foreign direct investment in the U.S. auto industry is currently valued at $74 billion—approximately 3 percent of all FDI in the United States.
Cars Move America
The financial crisis of 2008 to 2009 is now well behind the automobile industry. In 2014, light vehicle sales continued to grow, reaching 16.4 million units, a 5.8 percent increase over 2013’s 15.6 million units sold. And that growth shows little sign of declining in 2015. The CAR report, using econometric modeling, forecasts that from 2013 to 2018, sales will increase by approximately 12.8 percent overall. The forecast suggests that automobile sales will continue to steadily increase over the next several years, returning to a long-term trend of 16.9 to 17.6 million units annually.
In sales, employment, investment, R&D, and innovative technology, the automobile industry is continuing to move America. We hope you go see the fruits of our labor at the Washington Auto Show.