Improve the Comparative Advantage of US Car Manufacturers

The market share of US car decreased  quickly when more and more foreign brands entering into US market. Some foreign car makers have the advantage of low labor cost because the employees have national health care system. US car makers have a high health care bill so that lose competitive in the market. Because of globalization, foreign brands enter into the US market and caused the US market more competitive. The cost is one of the most important factors in this competition. The lower cost of the labor in the foreign car manufacturers help their products become more competitive in the US market. The technology is another important factors in the auto industry. Many car manufacturers compete in the market by more safe car, low gas consumption, low pollution, and more electronic control.


If the US business afford a portion of health care benefit will increase the comparative advantage in the short term. Decrease the cost so the car manufacturers can devote more money into car development or lower the car price to compete with other companies. In long term, it can not solve the problem. US car makers not only have the high cost problem, but also have many other problems need to be solved. Such as gas efficiency, most US car have a relative low millage for gas compare to Japanese car. In the recent economy condition,  the increase of gas price and the decrease of job oppotunity cause the increase demand of economical cars. Compared to European car, the gas consumption are similar, but the quality and design are still lack. US car makers especially for the there big, developing by multiple brand, each brand need to devote a great mount of capital and resource, so the manufacturers can not concentrate on the development of technology.

There are some other policies can improve the comparative advantage of US car maker. First, Increase the import tariff of cars and lower the tariff of the car parts. Using this policy, the import car will have a high price and lose the competitive in the market. In addition, the lower tariff of car parts can attract the foreign car makers found manufacturers in United States, so they need to more employees which need to pay the same health care bill. In addition, this policy also benefit US car makers by importing car parts with low price to cut the costs. Second, government awards for car technology improvement could be set to encourage the innovation of US car technology, technology is another factor the make the car competitive in the market, people are willing to pay the same or high price to buy a high quality, more fuel efficient cars. In the recent economical environment, fuel efficient car is more popular because of the high gas price and economy depression caused lower income. The government also can invest on the technology development or provide a part of capital for car manufacturers to improve the car technology so that US car will become competitive in the future market.