Why U.S. Car Exports Are Thriving

 

In 2014, over 2.1 million vehicles from the United States were shipped abroad. This is a notable figure because it marks the very first time in which the amount of cars built in the United States exceeded 2 million. To put this number into perspective, consider that it’s an 8 percent increase from 2013 and is a whopping 73 percent increase compared to 2004. Many of the vehicles that are leading the charge are Fords, BMWs, Jeeps, and even Nissans and Toyotas thanks to domestic-based manufacturing plants.

Just over 50 percent of the vehicles head to Canada or Mexico, both countries which also export to the United States in significant numbers. That’s partly due to NAFTA.  China, the Middle East, and South Korea are also some of the countries demanding large quantities of vehicles. There seem to be no signs of a slowdown, with many even predicting the number to increase in future years.

But What About the Strong Dollar?

The increase in the amount of U.S. built vehicles that are being exported would seem to be in stark contrast to the strengthening of the U.S. Dollar. It’s true that the U.S. Dollar is extremely strong right now, which would, in theory, make exports a less profitable endeavor. However, due to a combination of labor wages that are highly competitive and a more efficient manufacturing process, the United States has unexpectedly emerged as one of the low-cost countries to manufacture vehicles.

Auto plants in the United States have significantly restructured themselves after the recession from a few years ago and have eliminated many of the inefficiencies that had plagued them in the past.


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How Long Will It Last?

The answer is: not anytime soon.

One of the main reasons is that many foreign-based companies have built auto plants in the United States. Two notable names are BMW AG and Daimler AG. BMW and Mercedes-Benz, which is owned by Daimler, are currently expanding their production plants in America with hopes of increasing their exports even more.

For example, BMW is spending over $1 billion to increase the production capabilities of its plant in South Carolina by over 50 percent, which comes out to 450,000 vehicles.

Global demand for U.S. vehicles is continuing to increase, with companies like Ford exporting its vehicles to brand new markets in Asia and the Middle East. Even the Ford Mustang has seen a recent release in Europe for the first time directly from its factory in Dearborn, Michigan. Ford is also exporting its Lincoln MKC and Ford Explorer to more markets in Asia and the Middle East for the first time.

Not only are U.S. auto makers expanding the models that they’re exporting, but they’re also exporting into more countries than ever before.

These record number of exports are not due to fluctuations in exchange rates, but seem to be permanent. Considering the state of the auto industry in the United States during the recession, this is nothing short of a remarkable comeback!

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