Three things I didn't know about the auto industry (assuming this article is accurate).

[pampango]

"Until last year GM was the majority stake holder in Subaru. GM sold off their shares to Toyota. Ditto Isuzu."

When we bought our Subaru Legacy in 1999, I was happy it was built in Indiana, but not thrilled that the profits went to Japan. Now I find out that GM was the majority owner of Subaru at the time, so the profit went primarily to GM stockholders."

"Ford has owned a majority stake in Mazda for decades. Nearly every vehicle in Mazda’s lineup is platform shared with a Ford, Lincoln, Mercury, or Volvo."

I've never owned a Mazda, and I'm not sure whether they are manufactured in the US or not, those who have bought them can at least be happy that the profits from their purchase stayed with Ford's stockholders.

"Chrysler alone, backing out of a deal to buy automatic transmissions, forced transmission manufacturer Getrag into bankruptcy. Getrag supplies transmissions for every auto manufacturer."

Those DU posters warning of the damage due the suppliers in the auto industry if even one of the Big 3 went out of business are not just using economic logic, but the actual history of the auto industry.

http://andrewsullivan.theatlantic.com/the_daily_dish/2008/11/americas-other.html

If the "facts" presented by the author are not true, I would love to get the whole story.

[ThomWV]

1. You seem to believe that just because they are "American" companies that Americans own the stock

Do you think that the profits went back to this country? I'm inclined to doubt it. Those stock holders that got the profits could be anywhere, and you can bet an awful lot of them are where the money is, China and the mid east.

So in the end it really doesn't make much difference what country we ascribe ownership to because the actual owners are the share holders and they are spread all over the globe.

[floridablue]

2. No matter where the stock ownership dividends go, the

important aspect to me is where the balance of the profit went to be used for capital formation. If it were a Ford product, that would be the big banks in Detoit ?

[ThomWV]

4. Profit is not used for Capital formation

Profit is what is left after you pay the bills, fulfill other financial obligations, pay for your maintenance, and invest in new capital formation.

About 40 years ago when I was still in college I recall reading a most interesting idea, that a company that issued dividends was one in which the management was too unimaginative to find good places to use the money for greater growth; that the only reason the sent a check to you is that they weren't smart enough to know how to use it to make even more money for you. There may very well have been some truth to that notion.

Imagine that if GM had not sent out their couple of bucks per share dividends for the last 10 years and instead used that money to design, tool up for, and produce a pure electric vehicle or a hybrid that got 100 mpg - would GM be in the mess it is now? Would the share holders of GM be pleased, would the share price be as low as it is today? See what I mean? All they had to do was take the money that they paid out in dividends and use it more productively - but the management of GM was not clever enough to do that.

[pampango]

3. You make a a great point. I actually agree with you to a large extent.

I do see many posts here that people shouldn't buy "foreign" automobiles, even those manufactured in the US, because the profits go back to Japan, Germany, South Korea or wherever. As you say, "So in the end it really doesn't make much difference what country we ascribe ownership to because the actual owners are the share holders and they are spread all over the globe"

Even with Honda and Toyota in which, as far as I know, the Big 3 have no large stakes, the ownership is spread all over the world partly in the US and partly wherever the money is. Likewise, if one buys a GM, Ford, or Chrysler, the profits of those will be spread around the world, not just to the US.