Foreign Cars vs. American Cars: Which Are Better?

When you’re shopping for a car, you may be less focused on its country of origin and more interested in its features, quality, and reputation. But it’s helpful to know about some of the key differences between cars made at home and abroad.

Domestic brands can be less expensive to buy and repair. Foreign makes may be more reliable and fuel-efficient. Car insurance companies apply the same rating factors to both types of vehicles when calculating your insurance premium.

Ultimately, the best car for you depends on your needs. Here’s a look at important factors to weigh before deciding which type of car to buy.

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Foreign cars vs. American cars: What’s the difference?

The automobile industry has gone global, altering the definition of “Made in America” over the years. American vehicles may include foreign parts, while many Asian and European cars are at least partly assembled in North America.

But generally, the manufacturer’s headquarters, where the majority of its parts come from and where the final assembly takes place, define a car’s origin.

Cars from the same region or country share certain characteristics. Domestic brands often produce a wide selection of high-quality cars, focusing on larger vehicles like pickup trucks and SUVs, while foreign carmakers often produce compact or luxury designs.^[1]

Cars from foreign manufacturers make popular choices among American consumers. The Ford F-Series trucks are the best-selling vehicle in America, but foreign brands like Toyota and Honda dominate the rest of the list.

Here are some of the major differences between foreign and American brands.

Performance

Many top performance cars — vehicles with powerful engines, sporty speed, agility, and a superior driving experience — are foreign-made brands. These vehicles typically incorporate luxury features with performance capabilities.

Top performance/luxury brands include Bentley, BMW, Jaguar, Mercedes-Benz, and Porsche, according to Edmunds.^[2]

Reliability

Reliable cars require less maintenance and fewer repairs, and they tend to last longer — thereby saving you money over time. American automakers offer plenty of dependable options, taking four spots in a study that named the longest-lasting cars on the market.^[3]

Safety

All new cars come with safety features and options, but foreign vehicles earn more accolades in this category. For 2023, about 92% of the top safety picks from the Insurance Institute for Highway Safety (IIHS) were from foreign automakers.

German cars, like Mercedes-Benz models, topped the list, along with Japanese manufacturers like Honda and Toyota.

Fuel efficiency

Fuel efficiency can help you save money on gasoline costs, and it’s better for the environment. Foreign-made cars are typically more fuel-efficient than American vehicles.

The EPA’s Green Vehicle Guide lists models from Toyota, Kia, Lexus, Hyundai, and Volvo as the most fuel-efficient.

Technology

Many newer cars come with advanced features like blind-spot monitoring, backup cameras, lane assist, and more. But some carmakers are better than others at bringing new technologies to market, and foreign brands earn higher ratings in this category.

The J.D. Power 2022 U.S. Tech Experience Index (TXI) Study reviewed 32 car brands, and only one American automaker (Cadillac) earned an above-average score.

Purchase price

Domestic vehicles cost more on average compared to brands from overseas. In lists of the most affordable cars on the market, Japanese and Korean manufacturers like Hyundai, Mitsubishi, Kia and Nissan take the top spots.^[5]

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Resale value

A car that retains its value can help you recoup more of your investment when you’re ready to sell. According to a list of best resale value cars by Kelley Blue Book (KBB), both foreign and American car brands are equally represented. Five of the cars originate from a foreign country, while the other five hail from the U.S.

Insurance costs

Car insurance companies price policies based on several factors, including your vehicle’s model year, safety features, theft potential, and more.

Insurify data shows that American and foreign manufacturers are equally represented on the list of the 10 cheapest cars to insure. Brands like Subaru, Buick, Honda, Ford, and Chevrolet can all help you save money on your insurance rates.

The costs shown here are the national average monthly costs based on Insurify data.

Car brands made (mostly) in America

The American Automobile Labeling Act — or AALA — is a federal law that requires carmakers to disclose the percentage of parts that are American-made when a passenger vehicle is sold. American companies print this information on a sticker and place it on the new car’s window.

AALA information illustrates how the distinction between foreign and domestic brands blurs when you consider the percentage of U.S.-made parts a vehicle incorporates and the country where it was finally assembled.

The following table shows makes and models made mostly (60% or higher) in the U.S., according to AALA data.

Pros and cons of foreign vs. domestic cars

Ultimately, personal preference and affordability should drive your choice of a vehicle. But it’s worth noting that both domestic and foreign vehicles have advantages and disadvantages to consider.

Pros and cons of foreign vehicles

Pros and cons of American-made vehicles

Foreign cars vs. American cars FAQs