Tariffs on U.S.-made models will mean pricier BMWs in China
German luxury automaker BMW
BMW said it is "currently calculating related necessary pricing increases" for U.S.-made models imported into China and will announce them "at a later stage."
BMW exports high-margin X4, X5 and X6 SUV and crossover models to China. Last year, the automaker shipped more than 100,000 vehicles from the United States to China.
China, which just days ago cut tariffs on all imported automobiles, slapped an additional 25 percent levy on 545 American products, including U.S.-made cars, beginning on Friday.
The move came in response to the Trump`s administration tariffs on $34 billion of Chinese imports.
This poses a tough choice for automakers: absorb the cost of tariffs and take a hit to profits, or hike prices and possibly lose sales.
"The question for automakers is, are you able to sell your products to consumers at a higher price?" said Johan Gott, a principal at management consulting firm A.T. Kearney. "And if you can`t, what are you going to take that (profit) margin out of?"
Gott said automakers are already dealing with steel and aluminium tariffs in the United States. They also face the possibility that Trump may impose tariffs of up to 25 percent on vehicles imported from the European Union and the U.S. president has threatened to pull out of the North American Free Trade Agreement.
"If you are an automaker, right now you face the potential for a great deal of disruption," Gott said.
Ford Motor Co
German automaker Daimler AG
A spokeswoman for Daimler said the automaker is monitoring the tariff situation, but would not comment on its pricing strategy.
On the other end, General Motors Co
A GM spokeswoman said no decision has yet been made on a possible price increase for the Envision in the U.S. market.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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