Chicken Tax Derails U.S. Success Of Holden Ute

Bertel Schmitt
by Bertel Schmitt

“It should be right at home on the roads and farms of the US,” writes the Herald Sun in Australia, “but tariffs and the strong Australian dollar could prevent the Commodore Ute following the sedan as an export.”

It’s more the chicken tax than exchange rates what derails hopes of U.S. success of the Holden Commodore Ute. The new VF Commodore sedan will be exported to the U.S., where it will arrive as a Chevrolet SS. The Ute will stay at home.

Holden’s SA corporate affairs manager, Sean Poppitt said the Ute was “not a serious option under the tariff regime”.

“The tariff triples when you go from Commodore to Ute. It’s under a light commercial heading, so it’s a 35 per cent tariff,” he said. TTAC commenters say Poppitt and the Herald Sun should consult the customs tables.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Ajla Ajla on Aug 21, 2012

    Here is another blow to Holden's claim from what looks to be an official website of the Australian government: http://www.dfat.gov.au/fta/ausfta/outcomes/01_overview.html The third bullet point on the page under "for our manufacturers" specifically makes mention of utes and the removal of the tariffs. "The 25 percent tariff on light commercial vehicles that previously kept Australian utes out of the US market was removed immediately." I've found mentions of utes being exempt from the "Chicken Tax" from Bob Lutz quotes, from US automotive websites, from the website of the Canberra Times, from a website of the Australian government, from a website of the US government, and from the Australian correspondent on GMI. The only place that I can find that makes mention of the ute being subject to the light truck tariff are webites like those of the Herald Sun that are repeating the recent words of Holden's Sean Poppitt.

  • Wmba Wmba on Aug 21, 2012

    Interesting thread that just goes to show that company officials can be just as wrong as the typical man on the street repeating old wives' tales. Bad Holden. Also, I think, bad Tesla in a very similar way. "Pricing in foreign markets can be very complex, so we have taken a very straightforward, transparent approach to pricing Model S," said George Blankenship, vice president worldwide sales and ownership experience. "Canadian base prices start with U.S. pricing, plus 6.1 percent for import duties and an additional 1.5 to 2 percent, depending upon the model, for incremental transportation costs and country specific business expenses." Under NAFTA, and with vehicle VINs starting with 1, 3, 4 or 5, which means the US and Mexico, there is zero duty payable upon importation to Canada. As you would expect. The Tesla is being made at the former NUMMI plant in California. Why does Tesla think that a 6.1% import duty rate applies? That is the rate for Japanese and other countries vehicle imports to Canada, and is the only difference in pricing between the US and Canada for the Scion FRS, for example. For Tesla to get their duty rates incorrect for sales to the country nexr door, and apparently to be ignorant of NAFTA is pretty poor. Unless the vehicles are not given a US VIN, for some arcane reason. I tried to find an email address for Tesla Canada to inform them of the error which amounts to thousands per vehicle, but no luck. The site is riddled with BUY buttons instead. How do these companies manage to hire such incompetents?

  • GoesLikeStink GoesLikeStink on Aug 21, 2012

    So no El Camino SS?

  • RobertRyan RobertRyan on Aug 21, 2012

    There appears there is a Tariff and it applies because of the Asian sourced parts in the Ute. "2. Originating Goods (Article 5.1) Originating goods are those that: are wholly obtained or produced entirely in the country, such as minerals extracted there, vegetable goods harvested there, and live animals born and raised there; are produced in the country wholly from originating materials; or are produced in the country partly from non-originating materials. In this case, the non-originating materials must meet the requirements of the origin rules in the Annex 4-A (Textiles - see Chapter 4) and Annex 5-A (Goods other than Textiles). These Annexes contain the product-specific changes in tariff classification that non-originating materials must undergo for the finished goods to qualify as originating. The goods must also satisfy all other applicable requirements. 3. Change in Tariff Classification Approach to ROOs" Commodore Ute popularity: "The Ute is still selling consistently. It is always one of the models Holden dealers can't keep on lots - and more than half are V8s. They are not counted in Commodore sedan sales but consistently amount to 25-30% local production in addition to sedans and wagons. The Maloo Ute is just over 50% of HSV's business. In both cases it's because it's the cheapest way into a V8 Holden. "

    • Robert Gordon Robert Gordon on Aug 21, 2012

      Well the local content point (and it is calcualted by the manufacturer) is 50% for full tariff removal. Commodore sedan currently rates at 60%. However, a number of the major components such as the V8 engine and the 6L80E transmission are made in the USA which is removed from the calculation since that is in the FTA region. The Ute which is our subject matter has an even more favourable local content rating given that the drivetrain forms a greater proportion of the vehicle value (ie drivetrain is the same as sedan, but there is less other body stuff). Regardless, even if I were to on-sell a full imported ute from Thailand to the USA it would still only be taxed at 25% not the 35% or 40% figures that seem to have been pulled out of the bum of the journo and Holden dudes.

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