BMW Intends to Stay the Course in Face of New Tariff Proposal
BMW Group CEO Harald Krüger says the automaker fully intends on sicking with its current investment strategies in Mexico and the United States, even after President Donald Trump’s proposal to levy steep import taxes on vehicles brought into American borders.
“We need free world trade,” Krueger told the CAR Symposium automotive congress in Bochum, Germany, on Wednesday.
Earlier this year, BMW said it was going to complete construction of a billion-dollar factory in San Luis Potosi, Mexico, for the 3 Series — a vehicle that would be subject to Trump’s theoretical 20-percent tariff. It also plans to continue investing it its Spartanburg, South Carolina assembly plant. Spartanburg produces over 400,000 X3, X4, X5 and X6 crossovers annually and exports the majority out of the United States.
BMW is investing over one billion dollars to expand annual capacity in Spartanburg to 450,000 units and add the upcoming X7 SUV to its production lines.
While BMW is sticking to its guns at the moment, it has previously stated that it isn’t willing to roll with the punches. BMW brand’s board member for sales Ian Robertson told Automotive News Europe ,”If there was a real change in the tariff system, like there often is with changes in tariff systems around the world, we have the flexibility.”
All of Germany’s large automakers — Daimler AG, Volkswagen Group, and BMW — have made considerable investments in Mexico in recent years, as production costs are typically lower than in North America.
[Image: BMW] [Source: Reuters]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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If the government wants to create a revenue stream taxing well-off bimmer buyers, I'm sure BMW could care less. Their customers can afford it. Good way to tax the wealthy. Especially if the tariff fees are used to promote domestic job creation somehow. Of course, their SUV's are all made locally already, aren't they?
By the time BMW makes any real traction with Hecho en Mexico Trump will be gone. Even if if takes 4 years which I doubt it will. BMW will be just fine.
The US tariff will be offset by the lower cost of production in Mexico vs Germany. An those Mex made 3-series will be bought by non-discerning buyers at 2% discount vs Ger made. So Mexico strategy is sound. But, Krueger should be careful what he wishes for. It may just might come true. New Asian producers(ie Chinese) will take over the global auto markets. Just like Japanese/Taiwanese did in consumer electronics. It's interesting to see how the initial shock at Trumps actions becomes more and more palatable to liberal pundits and tv jockeys. The crying and freakouts are fading away. It's a new normal. Deal with it. Good going!
"The crying and freakouts are fading away." There's this river in Egypt you should read up on...