Americans and Europeans love their cars and combined are two of the biggest purchases of cars in the World. However, European cars aren't prominent over there and vice versa- but why is that? Why wouldn't the United States want to drive some of the quality cars that Europe produces that time and time again win the World Car of the Year award?
Well, there are multiple answers to why European cars just aren't as prominent as they could be and this blog aims to shed some light on this.
Tariffs and transport costs
European carmakers do not have many manufacturing plants in America. During our research we were able to find the following:
- Volkswagen Chattanooga Assembly Plant
- BMW plant in South Carolina
- Daimler AG (Mercedes) plants in Alabama and South Carolina.
That's it. Considering the lack of onshore plants, European carmakers will need to export their vehicles to be sold and pay the 2.5% (at time of writing) tariff just to get the cars to shore. Add that on top of the actual transport costs and a lot of the profit has been stripped away.
The increased costs involved with physically getting the car over there means that selling smaller cars is simply not worth it in the US. European companies would just transport their larger and more luxurious models to ensure the profit is worth it as they would need to increase the prices making them less competitive than they could be.
American manufacturers do not have this problem and do not need to pay the tariff so they can easily undercut their European competitors with ease. Worst of all, these tariffs could get harsher in the future.
Americans like American things
Americans are not subtle when it comes to patriotism and a love for all things American; this also extends to the products they buy. According to Monroe Engineering, 45% of Americans believe that made-in-America products are of superior quality and only 14% believe they are inferior.
There is nothing wrong with this view because at the end of the day they are driving cars made by their fellow Americans. They feel they can trust them because of it. A typical American will not be aware of stringent and beneficial European manufacturing standards but will be well aware of the American way of making cars. Plus, the US has a rich history of creating incredible cars so why would they doubt their prowess now.
This perceived bias makes the task of a European car brand even tougher and in a lot of cases a hopeless task.
To sell in America, European manufacturers would need to make changes to the vehicles so that they adhere to the US's car regulations which drive the cost up and profits down even more. This also works both ways with American brands sticking to EU regulations (pre-Brexit) and UK regulations (post-Brexit).
We don't know the ins and outs of US transport regulations (and why would we, we are a UK leasing company) but if you're curious you can find out more on their website here.
American cars are bigger, and they're used to it
Americans like their cars big and Europeans love their small hatchbacks - these two statements are not compatible to be able to sell effectively both ways. Although European manufacturers do make large vehicles they are not the biggest selling models in most cases and are quite costly and time-consuming to build.
Whereas tried and tested American cars are big as standard to help American citizens 'keep up with the Jones' so to speak.
American drivers love muscle
Most people vaguely familiar with the world of driving in the US and Europe know that American cars have big engines with huge torque and power behind them and European cars do not. A car such as the Focus RS in the UK is regarded as a powerful and fast car but in America, it is slow and sluggish.
Adapting to European engines would be a major task and potentially a lesser enjoyable experience for an American as Europe's smaller engines will feel like hard work to drive when compared to the lazy nature of having an American V8 being able to pull away with ease and take on any hill without breaking a sweat.
Despite that, European engines are in fact much more complex and a bigger feat of engineering than American engines but this does go back to an average American's desire to drive an all-American 'big' car but not necessarily the 'best'.
Fuel economy is not the priority
Fuel is much cheaper in America than in Europe and fuel economy standards are miles behind some of the other countries around the globe. Because American manufacturers aren't forced to make vehicles economical they don't put as much R&D behind achieving it as EU vehicles do. European engines being much more complex and economical falls on deaf ears in the States as many would not realise the cost savings because fuel is so cheap, to begin with... so why bother? This isn't to say that standards aren't going to get better in the future but for now North Americans just don't want to lose out on the power and muscle to save a few dollars.
Take a look at this chart from the NYTimes where American fuel standards sit alongside the other nations.
Naturally, as European manufacturers do not have a thriving market for their vehicles then they aren’t as inclined to build dealerships and service centres around the country - this limits the customer support they are able to provide. For those with used European vehicles then spare parts can become expensive and scarce which can put off potential American buyers and cripples the used car market. This is also a blow for personal car leasing and business car leasing as there is no support from these cars be sold used.
This can create a level of anxiety which puts potential buyers off and draws them back to their trusted American dealer.
American roads are in bad shape
The percentage of roads in bad shape in America has increased consistently for more than a decade as a report by the USA Streets Blog highlighted. European roads aren't perfect but they are much better with many being ranked as 'good' according to the EC's own study. With this in mind, European carmakers build cars to deal with Europe's roads and not America's; which means a stark change for Americans driving imports.
European cars are just not built for the wide-ranging types of road surfaces throughout the States, especially in areas such as Texas, New Mexico, Arizona and northern states such as Montana, Minnesota, Alaska and Wisconsin.
What are the sales figures?
Thanks to some feedback on our Facebook group we've noticed many saying they do see a lot of European cars in America. However, this was never in dispute. Our argument was that they didn't sell WELL over there. We've now found some research which shows this.
And lastly, Mercedes sales figures showing a decrease in market share