Alan Reynolds

General Motors' plan to eliminate 25,000 U.S. jobs by 2008 follows a move last fall to eliminate 10,000 jobs in Germany, out of 324,000 employees worldwide.
Japanese brands captured 32 percent of the U.S. vehicle market in the first quarter, up from 25.3 percent in 2000, while the market share of Big Three brands has declined to 57.8 percent from 65.2 percent.

 What matters to the overall economy, however, is the production and sales of U.S. manufactured vehicles and parts, regardless of the apparent nationality of the brand name on the trunk.

 According to the Monthly Labor Review of February 2004, U.S. motor vehicle output rose by 3.6 percent a year from 1992 to 2002; production of parts rose by 5 percent a year. Those figures include the 2001 recession, after which real GDP of the motor vehicles and parts industry rebounded by 15 percent in 2002 and 8.9 percent in 2003, according to the latest Survey of Current Business. In the first quarter of 2005, real GDP of the motor vehicle industry was up 5.8 percent from a year earlier.

 The problems of General Motors are not the problems of the U.S. vehicle industry. The United States remains a uniquely outstanding place to build cars and trucks, which is why Toyota, Nissan, Honda, Hyundai, BMW and Mercedes-Benz have invested heavily in U.S. factories.

 The Center for Automotive Research notes that sales of foreign-brand vehicles produced in the United States rose 8.8 percent last year, although GM's sales were down 1.8 percent and Ford's down 4.9 percent. Chrysler was up 3.7 percent, however, and its 13 percent market share was higher than it was in 1986.

 Because so many Japanese cars, trucks and engines are now produced in the United States, increased U.S. sales of Japanese brands has not meant increased U.S. imports of Japanese vehicles and parts. U.S. imports of vehicles, parts and engines from Japan amounted to $48.6 billion in 2004 -- down from $49.3 billion in 2002.

 The surge in gasoline prices recently depressed vehicle sales in general. U.S. brands fared no worse than some from Europe and Asia. So far this year, sales of cars and light trucks are down 5 percent for GM and 4 percent for Ford, but they are also down 5 percent for Mercedes Benz, 24 percent for Volkswagen and 15 percent for Mitsubishi. Sales are up 12 percent for Toyota and 16 percent for Nissan, but they are also up 6 percent for Chrysler, compared with 3 percent for BMW and only 1 percent for Honda.

Alan Reynolds

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