Made in the USA Reports No. 30, Issue 4 April, 2018Buick Fails to Get U.S. Consumers to Buy Its Imported Cars
By Joel D. Joseph, Chairman, Made in the USA Foundation
General Motors, which U.S. taxpayers bailed out in 2008 for $50 billion to save U.S. jobs, has been importing Buicks made in China and Poland. That's the bad news. The good news is that consumers are rejecting these imported vehicles.
Buick manufactures its large SUV, the Envision, at the Dong Yue Foundry in Yantai, Shandong Province, China. Cars.com is currently showing 14,600 Envisions in stock at U.S. dealerships, including unsold 2016 and 2017 models. In 2017, GM sold only 40,000 Envisions in the United States. Buick's large stock of unsold cars represents about five months of sales, which is a large number for the auto industry. By comparison, in 2017, U.S. consumers bought 250,000 U.S.-made Ford Explorers and 52,000 U.S.-made Acura RDXs, two competing SUVs. Chevy Tahoe, also made by General Motors, sold 100,000 U.S.-made vehicles last year. One could reasonably conclude that the Envision has been a dismal failure, not because of government action, but because of lack of consumer demand.
The Envision has been hurt by its Chinese label and bad reviews. Consumer Reports found the vehicle, "Underdeveloped, overpriced ($35,000 and up), and over here. Handling is clumsy and the brakes are mushy... The ride is a mixed bag, both soft and unsettled at the same time. Wind noise is pronounced."
The Buick Cascada is a convertible manufactured by General Motors in Gliwice, Poland. It has been a huge failure with sales of only 7,000 cars in 2016, which declined to 5,000 in 2017. In comparison, Ford sold 30,000 Mustang convertibles in each of those years. The Cascada is also expensive, at $35,000, and received poor reviews. Car and Driver found that the Cascada "had serious cowl shake, so severe as to be revealed by high-frequency side-to-side motion of the back-seat headrests in the rearview mirror while driving over even modest pavement imperfections... The Buick shows its age and lack of attention to modern details in other ways. Some deliberation is necessary when opening the doors to give the frameless glass a chance to drop free of the roof's weather seals. Irritating rubbing sounds emerge from the relative movement between the glass and the rubber seals with the car in motion."
China charges a 25% tariff on cars imported from the United States. The U.S. charges a duty of only 2.5% on cars coming from China. To level the playing field, we must raise our tariff to equal that charged by China. I have proposed the Chinese American Reciprocal Trade Act, that would raise all U.S. tariffs to the levels charged by China for the importation of American-made products.
European Union Tariffs
The European Union, which includes Poland, as well as Italy and Germany, charges a duty of 10% on American-made cars. The U.S. charges only 2.5% on European imports. If we had imposed a 10% duty on Polish cars, Buick would not have made the Cascada there.
The U.S. government also bailed out Chrysler Corporation, which has since been acquired by FIAT. Since the bailout, Chrysler has been importing Jeeps from Italy. The Italian-made Jeep Renegade is the first Jeep that has been made outside of the United States. Most U.S. consumers do not realize that the Renegade is made in Italy and sales are brisk, at about 100,000 per year.
Free and Fair Trade
The United States must increase its tariffs to levels charged by its trading partners. The high tariffs charged by China are forcing U.S. auto companies to set up shop in China. Tesla wants to sell its cars in China, but its sales are slow there due to the high tariffs.
U.S. consumers are resisting many of these imports. There are excellent domestic alternatives to most imported cars, especially SUVs.