Specialty Auto Insurance: The Foreign Truck Disadvantage
Have you ever wondered why America is the leading producer in the pickup truck market? Well there’s actually a pretty good reason that goes far beyond American craftsmanship and quality. In fact, one of the main reason’s America has maintained a strong monopoly on light duty truck production over the years is a little piece of legislature passed by Lyndon B. Johnson during the Cold War known as the “chicken tax”.
The Chicken Tax is a 25 percent tariff on a number of foreign goods such as starch, alcohol and light trucks, which was America’s response to taxes imposed by France, West Germany and other nations on poultry goods imported from the United States. Over time the tax on potato starch, dextrin, and brandy were lifted however the statute imposing the 25 percent tax on light trucks remains to this day. The tariff directly affected any country seeking to bring light trucks into the U.S., including Japanese auto makers and other smaller Asian and European vehicle producers looking to gain a foothold in the American auto market. While many have attempted to contest and repeal the tariff, U.S. legislature continues to keep the policy in place to protect U.S. domestic automakers from foreign competition in truck production.
As such, the tax remains one of the largest hurdles for foreign vehicle producers because it puts these companies at a distinct pricing disadvantage. Foreign automakers would have to increase the market prices of any truck models nearly $15,000 to compete with the average American truck maker’s return. Instead most foreign automakers choose to focus on expanding their product lines in every other available market sector, from compacts to SUVs and sports cars. Others, like Toyota, have taken to establishing North American production plants where they can produce trucks on American soil to avoid the tariff. While Toyota has done relatively well in marketing and branding of their Tacoma and Tundra truck platforms, American Companies Ford and General Motors continue to split over 60 percent of the truck market.
Some industry analysts suggest that the Chicken Tax has actually created a lag in technical and design innovation when it comes to light truck platforms which has adversely affected the overall quality of modern pickup truck offerings. Perhaps someday we will have the opportunity to see what companies like Mercedes and BMW would dream up in the form of a luxury pickup truck line, but as of now truck enthusiasts have roughly a hundred years of American trucks to collect, restore and treasure.
At Condon Skelly, we understand the importance of protecting your collectible, antique, classic, muscle custom and exotic cars is. That’s why we specialize in offering complete Specialty Auto Insurance. We’re a group of collectors, enthusiasts, and professionals who specialize in insuring all types of collector vehicles. Our team is as passionate about protecting your vehicles as you are about collecting them. We can help you secure affordable, industry-leading specialty auto insurance coverage to protect your classic, antique, or exotic vehicles. For more information, contact our Specialty Auto Insurance experts today at (866) 291-5694.