While media attention is focused on the problems facing the traditional, Detroit-based U.S. auto industry, there’s another U.S. auto industry hub based in the Los Angeles area. According to the Los Angeles County Economic Development Corporation (LAEDC), this industry is thriving, generating billions of dollars in business activity as well as creating high quality jobs. However, neither residents nor outsiders truly understand the vast benefit of this activity.
The LAEDC’s new report, “The Automotive Industries in Southern California,” highlights the wide variety of activities taking place. They include the North American headquarters of eight foreign auto makers, including Toyota (celebrating the 50th anniversary of their operations in the U.S. in 2007), Honda and Hyundai. Classified by government statisticians as “wholesalers,” these firms employ nearly 15,000 people and generated nearly $45 billion in sales in Los Angeles County alone.
Supporting the auto makers are 14 research, design and development facilities in Southern California, plus two proving grounds. In the works are Honda’s Advanced Design Studio and Acura’s Design Studio. Also, there is a variety of car customization activities as well as manufacturers of aftermarket equipment.
Why Southern California? The attractions include the Art Center College of Design in Pasadena, which is well known for its auto design program, as well as the creative talent in the region spawned by the film and aerospace industries. Finally, there is the long standing “car culture” of Southern California. A good indicator of this car culture is the large number of auto magazines published locally.
The LAEDC study reported that retail sales of new and used cars and light trucks in Southern California totaled over $33.1 billion in 2004, while automotive parts sales added another $2.4 billion.
Some other facts about the auto industries in Southern California include:
- There are 1.2 vehicles per licensed driver (some of these are specialty vehicles not intended for every day use)
- In California, 53.8% of the new car market is held by imported brands. Toyota/Scion has the lead, with a 23.4% market share
- The three local ports – Long Beach, Los Angeles and Hueneme -- handled 9.8 million vehicles in 2005, of which 94% were imports
- While people elsewhere in the nation may not realize it, they “see” Los Angeles County everyday in TV commercials for automobiles, with Downtown Los Angeles a very popular location due to its bridges and tunnels.
The LAEDC study noted some challenges to the region’s auto industry. These include the move of Nissan’s North American headquarters to Tennessee, driven by an effort to cut costs and facilitated by very large incentives offered by that state to lure the operation. Another risk is the effort by domestic U.S. auto makers to pare back their dealer operations. Many sell a small number of vehicles per month, which results in poor operating margins. This could be bad news for cities that lose such a dealership.
“Leaders in Los Angeles need to pay a little more attention to this industry, because of the multiple benefits it yields,” said Senior Vice President Jack Kyser, chief economist, LAEDC. “Tennessee clearly recognized them. The auto industry is also a component of Southern California’s unique collection of industries driven by creativity.”
“The sizable automobile industry in Los Angeles County is one more reason this region has become the Business Capital of America,” said LAEDC president and CEO, Bill Allen. “We recently recognized Toyota with an Eddy Award for their influential role over the past five decades in making our region the international car culture capital of the world.”
About the LAEDC
The LAEDC, the region’s premier business leadership organization, is a private, non-profit organization established in 1981 under section 501(C)(3). Our mission is to attract, retain, and grow business and jobs in Los Angeles County. Since 1996, the LAEDC has helped retain or create more than 122,680 jobs, providing $5 billion in direct economic impact from salaries and $83 million in annual tax revenue benefit to Los Angeles County.