By on July 30, 2018

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BMW says it will hike the price of two utility vehicles in China to cope with the additional cost of tariffs on U.S. car imports in the world’s biggest vehicle market. The models are the X5 and X6, both manufactured in South Carolina.

This news comes after China increased import duties on all automobiles from the United States to 40 percent earlier this month. China had previously said it would reduce its already high vehicle tariffs across the board as a sign of good faith — which it did, while simultaneously slapping new punitive tariffs on the U.S. Meanwhile, President Donald Trump has postponed prospective automotive tariffs while negotiations take place with Europe.

If you needed proof that a trade war is on and were wondering how automakers would handle it, look no further. BMW says it will have to raise the models’ Chinese MSRP by 4 percent to 7 percent. It’s a relatively modest increase considering how utterly massive the new import fees are, which indicates a willingness from the automaker to absorb some of the associated costs just to remain in the market. It’s something BMW is not alone in doing, and there could be a valuable lesson to be learned from that.  (Read More…)

By on July 26, 2018

President Donald Trump agreed on Wednesday to refrain from imposing car tariffs while the United States launches negotiations to cut other trade barriers with the European Union. After a meeting at the White House, Trump and European Commission President Jean-Claude Juncker agreed to begin talks that would also seek to resolve U.S. tariffs on steel and aluminum, as well as retaliatory duties from Europe.

It’s the first lull we’ve seen in the trade war in a while. Meanwhile, Chinese trade relations remain as bitter as ever.  (Read More…)

By on July 19, 2018

Image: 'master blaster'

As the United States considers imposing new tariffs of up to 25 percent on imported automobiles and parts, the industry has rallied together to stand against the proposal. Manufacturers already made individual cases for themselves and are now dropping very bleak-sounding industry projections on the U.S. Commerce Department in the hopes of changing the administration’s mind.

However, President Donald Trump continues to promote the imposition of tariffs to force a sort of economic justice. For years, China’s protectionist policies regarding automobiles forced American manufacturers to build inside its borders and partner with Chinese firms for years. That’s something Trump claims could be a national security risk. China also recently upped its tax on American-made autos to 40 percent, shortly after promising to lower them. Meanwhile, Europe still holds a consistently higher tariffs on imported cars than the U.S., except for light trucks.

Commerce Secretary Wilbur Ross seems aware that China may have gamed the system in its favor, but appears less convinced that it’s a matter of national security. On Thursday, during a hearing on the probe into the industry, he said it was “too early” to say what the United States would do. Meanwhile, auto groups continue to make their terrifying case. (There’s also quite a bit of rolling PR in downtown D.C. today, as you’ll see below.) (Read More…)

By on July 19, 2018

2018 Volvo XC60, Image: Volvo Cars

Unlike Volvo’s S90 sedan, which is built half a world away from its V90 wagon stablemate, the Chinese-owned Swedish automaker has some flexibility in where it sources its XC60 crossover. Two plants — one in China, one in Torslanda, Sweden — crank out the second-generation utility vehicle, but the U.S. market gets its full share from the Orient.

After the Trump administration imposed a tariff of 25 percent on Chinese-built vehicles, Volvo’s XC60 suddenly found itself dragging a financial anchor. Hardly a great situation for a model that outsold all other Volvos in the U.S. last month. To side-step the tariff, Volvo’s already making changes.

Say goodbye to the Chinese XC60. (Read More…)

By on July 12, 2018

Donald Trump, public domain

The past week has seen a flurry of trade trade announcements — none of them particularly promising for the United States. After a brief moment where President Donald Trump’s tariff threats seemed to have a positive impact on the European Union, Germany threw new support behind China as the People’s Republic issued a stunningly large 40-percent retaliatory tax on vehicles imported from America.

While Europe and the U.S. still might work out a zero tariff deal on automobiles, the recent activity has led Trump to respond with another warning. He now claims if the region cannot engage in fair trading practices with the United States, he’ll further restrict imported cars. (Read More…)

By on July 11, 2018

China and Germany signed a collection of commercial accords valued at $23.5 billion this week. Meanwhile, the nations’ leaders publicly affirmed their commitment to a multilateral global trade order, while the United States adopts a more protectionist policy.

“We both want to sustain the system of World Trade Organization rules,” German Chancellor Angela Merkel said during a press conference. Chinese Premier Li Keqiang, also present, agreed and stated protectionism must be prevented for the good of the global economy.

Chinese President Xi Jinping has already pleaded for governments to maintain an open trading policy. “We reject selfish, shortsighted, closed, narrow policies, [we] uphold World Trade Organisation rules, support a multi-lateral trade system, and building an open world economy,” Xi said in an incredibly hypocritical speech from last month.  (Read More…)

By on July 5, 2018

BMW SAV assembly plant South Carolina - Image: BMW

The fresh threat of new automotive and parts tariffs from the United States has everyone up in arms. We recently published an exhaustive list of comments manufacturers and local governments made to the U.S. Commerce Department. They, along with suppliers, universally despise the idea and are doing everything in their power to convince the Trump administration to reconsider. Many are even discussing the grim prospect of layoffs and suspending investments.

However, the president remained firm on doing whatever it takes to bolster domestic production and U.S. automotive exports while the world tried to make sense of his strategy. Was this a madman playing hardball and gambling with the industry’s future, or the work of a master dealmaker forcing others to come to the table? Perhaps a little of both?

Earlier this week, the U.S. ambassador to Germany told German car executives that President Donald Trump would suspend threats to impose tariffs on cars imported from the European Union if the European Union lifts duties on U.S. cars. But the wildest part of all of this is that both the automakers and the German government seem to be in support of it.  (Read More…)

By on July 3, 2018

2018 Toyota Camry Georgetown Kentucky assembly plant - Image: Toyota

It’s no secret that the automotive industry has come out universally against the Trump administration’s proposal to increase import tariffs. Numerous manufacturers weighed in independently on the issue as trade groups rise in opposition to the U.S. Commerce Department’s national security investigation.

The industry’s claim that imported vehicles don’t pose a risk to the wellbeing of the United States seems to have fallen on deaf ears. Threats that the prospective import duties on parts could result in fewer, more-expensive automobiles being produced domestically have been heard — and rebuked — by President Trump.

“What’s really going to happen is there’s going to be no tax,” he told Fox News in a weekend broadcast. “You know why? They’re going to build their cars in America. They’re going to make them here.”

However, automakers, parts suppliers, and even local governments have submitted comments to the Commerce Department ahead of the hearings scheduled for July 19th — and they’re all incredibly negative.  (Read More…)

By on June 30, 2018

2019 Ram 1500

Without a functional plan, each episode of the A-Team would have ended with four funerals. For Fiat Chrysler, however, the solution to its problem doesn’t involve welding armor plating to a series of scrapyard vehicles while the guy from Breakfast at Tiffany’s lays down covering fire with a Ruger Mini-14.

FCA’s main concern involves the current occupant of the White House, and what his proclamations could mean for the automaker’s bottom line. A 25-percent tariff on imported vehicles could erase nearly a billion dollars in profit each year.

Don’t worry — FCA’s working on a plan. (Read More…)

By on June 29, 2018

Automakers are not thrilled with the White House’s current interest in automotive tariffs. With factories scattered across the globe, no major manufacturer would go untouched by the proposed increases in import duties or the retaliatory tariffs foreign governments may issue in response.

There’s a lot to lose from a financial perspective. According to a recent analysis from Evercore ISI, Fiat Chrysler would take an annual hit of $866 million if the United States placed a 25-percent import tariff on cars. Considering that other automakers stand to lose at least that much, it’s unsurprising they’ve begun raising their corporate voices over the matter.

Granted, the FCA example is a worst-case scenario for that particular brand, but even a lesser tariff would see a profit loss of hundreds of millions. For an automaker like Mazda, the loss would be far worse. (Read More…)

By on June 28, 2018

2018 Toyota Camry LE - Image: Toyota

Toyota’s not going silently into a potential future where tariffs are as prevalent as man buns and tattoos in a brewpub. In its submission to the U.S. Commerce Department, Toyota wants the government to know it’s a standout business, and that a tariff on imported automobiles and auto parts would backfire.

Even for vehicles built in the U.S., American buyers would face a steep price hike, Toyota claims. Care to fork over an additional $1,800 for a Kentucky-built Camry? Meanwhile, a Canadian supplier association representative warns of “carmageddon” if the tariffs come to pass. (Read More…)

By on June 26, 2018

Last week, we discussed how the motorcycle industry’s total failure to entice new riders for over a decade has come back to bite it in the ass. Two-wheeled ownership declined drastically in the United States after the Great Recession and never really bounced back. Blame a disinterested population of youngsters with less discretionary funds and few entry-level options to consider.

I speculated that automakers could be on a similar path, despite the passenger car segment being more of a necessity for average commuters and less apt to collapse outright. But that isn’t to presume they might not be subject to similar pitfalls, and we’ve a new one to consider. Harley-Davidson, which serves as the poster child for the motorcycle industry’s current crisis, recently announced it will end all U.S. production of motorcycles sold in Europe.

Those bikes will now be manufactured overseas. The company said in a regulatory filing with the U.S. Securities and Exchange Commission that retaliatory tariffs levied by the European Union on motorcycles exported from the U.S. jumped from 6 percent to 31 percent. Harley-Davidson’s already expensive products come at an additional premium in Europe, and the the company estimates the new fines will add another $2,200 per motorcycle, on average. (Read More…)

By on June 25, 2018

Trump

The Trump administration is planning to impose incredibly restrictive investment limits against China. While the barriers could be argued as fair, considering China has some pretty serious restrictions of its own, the timing isn’t great. Treasury Secretary Steven Mnuchin pursued a less confrontational approach toward China after the nation showed some lenience in earlier promises to open its automotive and tech sectors through reduced tariffs, eventually eliminating state-mandated joint partnerships.

This move will no doubt make his job a lot more complicated.

It seems that the limits would restrict certain Chinese companies from investing in U.S. technology firms and block additional tech-related exports to Beijing. Among the industries most affect are robotics, aerospace, and automobiles — which have been labelled by the administration as a threat to economic and national security.  (Read More…)

By on June 21, 2018

The ground beneath the factory Volvo Cars opened Wednesday in South Carolina grew shakier after company executives warned that the U.S.-China trade dispute could undo plans to create up to 4,000 auto jobs in the state.

As you probably know, Volvo is currently owned by Chinese automaker Geely — which has a lot to lose if trade relations break down. Geely intends to export Volvo’s American-built cars to markets outside the United States. The situation’s a problematic one, as Volvo also imports the bulk of its U.S. market vehicles and any economic hurdles would surely gum up the works. (Read More…)

By on June 15, 2018

Image: GM China

Just in time for the weekend, an escalation in the ongoing trade wars has seen the Trump administration announce a 25 percent tariff on $50 billion worth of goods imported from China. These tariffs include automobiles. For its part, China retaliated by applying a further 25 percent tariff on a similar amount of American goods, including automobiles.

The move comes less than a month after China announced a plan that would lower import duties and eventually allow foreign automakers to set up shop without a joint Chinese partner. Of course, that was then, and this is now. (Read More…)

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