Michigan 4th in US auto employment; trade group outlines industry’s trillion-dollar impact

The automotive industry is undeniably a cornerstone of Michigan’s economy, impacting countless residents either through direct employment or connections to suppliers. The state’s strong presence in the sector is a reflection of its long history as the heart of the U.S. auto industry. However, the influence of the auto industry stretches far beyond Michigan, shaping the broader national economy as well.

A new study from the Alliance for Automotive Innovation, the main U.S. automotive trade group, sheds light on the immense economic footprint of the industry, particularly at a time when U.S. policy, including tariffs, could affect its growth and competitive edge. John Bozzella, president and CEO of the Alliance for Automotive Innovation, emphasized that automaking is vital to the global competitiveness of the U.S. economy.

Economic Impact of the Auto Industry

The auto industry is a major economic engine in the U.S., contributing over $1.2 trillion to the economy each year. In 2023 alone, 15.2 million new vehicles were sold, generating $643 billion in sales. The industry’s impact isn’t limited to vehicle manufacturing—each dollar added by motor vehicle manufacturing contributes an additional $4.23 in economic value. This multiplier effect underscores the industry’s crucial role in driving growth and innovation across the economy.

In fact, the auto industry’s economic contribution is so significant that if it were a nation, it would rank 17th in global GDP, based on figures from the World Bank. This highlights how deeply ingrained automotive manufacturing is in shaping both local and national economies.

Employment and Auto Manufacturing Jobs

In terms of direct employment, Michigan leads the nation with the highest number of auto manufacturing jobs, with 206,178 individuals employed in the sector. However, when considering the total number of jobs within the auto industry, including those in suppliers and related fields, Michigan ranks fourth overall, behind California, which has 841,986 total auto industry-related jobs. Across the country, the auto industry supports approximately 10.1 million jobs, representing nearly 5% of total U.S. employment. The sector generates more than $732 billion in payroll annually, underlining the extensive labor market tied to automotive production.

Tax Revenue and Economic Contributions

The auto industry’s contributions extend into tax revenues as well. In 2022, the industry generated over $181 billion in federal tax revenue and nearly $90 billion in state taxes, accounting for 6% of all state tax revenue collected in the U.S. Notably, these figures surpass Michigan’s entire state government budget of $82.5 billion. The sale of both new and used vehicles also plays a significant role, with $36 billion generated from new vehicle sales and another $20 billion from used car transactions in 2023 alone.

Global Ranking and EV Growth

On the global stage, the U.S. remains a leader in automotive manufacturing, ranking second in global production, just behind China. At its peak, the U.S. held the title of the largest vehicle producer, but has since been surpassed by China, which now produces nearly three times as many vehicles. Nevertheless, the U.S. still accounts for around 12% of global vehicle production, a notable position despite China’s rapid expansion.

The rise of electric vehicles (EVs) is a notable trend shaping the future of the industry. While over 98% of vehicles on U.S. roads are still powered by internal combustion engines, the growth of EVs is becoming increasingly significant. By 2023, over 4.3 million EVs were on the road, and in 2024, sales of EVs surged, comprising nearly 10% of all light vehicle sales. This growth has spurred demand for EV-related infrastructure, including public charging stations and the manufacturing of EV batteries.

Investment in EV and Battery Production

The shift to electric vehicles is driving substantial investment in battery manufacturing. More than $90 billion has been allocated to EV battery production, leading to the creation of over 65,000 new jobs. At least 33 new battery plants have been announced, which will vastly expand the current battery production footprint. This surge in investment highlights the growing importance of EVs within the auto industry and the associated infrastructure needed to support them.

Conclusion

The U.S. auto industry remains a vital force in the national economy, with Michigan at its core. As the industry navigates challenges such as trade policy, global competition, and the rise of electric vehicles, its continued growth will depend on technological advancements, increased investment in EVs, and the fostering of domestic manufacturing jobs. The auto industry’s trillion-dollar impact, significant employment numbers, and essential tax contributions underscore its central role in the U.S. economy, making it clear that automaking is a fundamental driver of American prosperity.

Disclaimer – Our editorial team has thoroughly fact-checked this article to ensure its accuracy and eliminate any potential misinformation. We are dedicated to upholding the highest standards of integrity in our content.

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