Get Out of China Free Card: GM Wants the Buick Envision to Get a Pass on Import Tariffs
General Motors wants an exemption from a 25 percent U.S. tariff for the Buick Envision, the Chinese-made sport utility positioned between the Encore and Enclave. On Thursday, the automaker said it filed the request on July 30th with the U.S. Trade Representative to exclude the model from the prospective Section 301 tariff on products shipped from China.
The Envision hasn’t been a strong seller in the United States. While it managed to move 41,040 units in 2017, this year is not on track to meet that number. Obviously, the model has had some troubles. Early reviews were unfavorable, often accusing the Envision of being a faux luxury vehicle with an overly ambitious price tag. However, the manufacturer has since dropped the price and updated the vehicle for the 2019 model year.
Unfortunately, enough damage was dealt in those first two years to make the new model look less appetizing to customers. It now holds the stigma of an overpriced, Chinese-made compact crossover that falls short just about everywhere. It needs time to rebuild its image after the refresh, and it won’t be able to manage that if it is taxed into oblivion.
According to Reuters, GM stated in its request that Envision sales in China and the United States would generate funds “to invest in our U.S. manufacturing facilities and to develop the next generation of automotive technology in the United States.”
We don’t know about those U.S. sales, but Buick moves a lot of metal in China, where this whole problem originated. General Motors established production sites in The People’s Republic to great success. Buick’s vehicles sell fabulously well in that country, and building them there is really the only way to make that happen — the nation employs strict laws mandating local partnerships and imposes high tariffs on imported vehicles. It recently raised those tariffs to a whopping 40 percent, more than enough to cripple any imported model’s chances of being a sales success.
Meanwhile, the U.S. is working on a response as the trade war between the two nations continues to evolve. But the Envision doesn’t sell well enough domestically to rationalize building it here. Buick will be lucky if it sells 35,000 of them in America by the end of 2018, but it can comfortably count on six-figure volume in China.
What happens if GM doesn’t get its exemption? That’s anybody’s guess. While the media and automakers constantly talk about the looming threat of new tariffs forcing up the price of automobiles by thousands of dollars, that’s not exactly what we’ve seen occur. BMW indicated its willingness to absorb some of the financial impact after China escalated tariffs, while Ford stated it will not increase prices in Asia at all, as it doesn’t want to further hamper its ability to do business there.
While there’ll still be an impact on automakers and suppliers, consumers might not be as burdened as they’ve been led to believe. It’s also looking increasingly likely that the U.S. will focus specifically on tariffs for Chinese goods and leave other nations alone.
That said, there is no way new import duties won’t affect prices overall. Likewise, some models (possibly the Buick Envision) might simply stop being shipped over while automakers focus on higher volume models manufactured within America. At this point, however, GM hasn’t announced any plans to stop U.S. sales of the Envision or relocate production of U.S.-bound models to facilities outside of China.
[Image: General Motors China]
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