BMW follows Tesla in raising prices in China

Bloomberg

Tue, Jul 31, 2018 - Page 10

BMW AG raised prices of some mid-sized sport utility vehicles (SUVs) in China, following Tesla Inc, as automakers try to offset the cost of higher tariffs triggered by the country’s trade war with the US.

The German automaker on Sunday said it would increase suggested retail prices for X5 and X6 models, built in Spartanburg, South Carolina, by 4 to 7 percent in China.

Tesla earlier this month raised prices for its Model S and Model X after China’s additional tariffs on US-made cars kicked in on July 6.

US President Donald Trump has imposed duties on billions of US dollars in Chinese imports and has threatened more, prompting retaliatory measures from Beijing.

Automakers are among the trade war’s most visible victims, though the effects are rippling through other industries including soybean farmers, industrial chemical manufacturers and even lobster-trap makers.

The additional tariffs are forcing automakers to absorb the costs or pass them on to customers.

BMW had said earlier that it would not be able to absorb the higher levies completely and was calculating the necessary price increases.

With the higher prices, an X5 sells for about the equivalent of US$107,000 in China, according to the company’s Chinese Web site.

Some versions of Tesla’s Model S go for more than US$200,000 in China, and some editions of the Model X can be as much as US$230,000.

Cars made in the US face a total tariff of 40 percent in China, compared with 15 percent for cars imported from other countries.

Manufacturers, such as Tesla and BMW, are starting or expanding production in China, the world’s largest car market, to mitigate the effects of trade tensions and reduce shipping costs.

Ford Motor Co, maker of the Lincoln luxury vehicles, yesterday reiterated that it has no plans to increase the sticker prices on its import line-up in China.

Daimler AG last month said that the higher tariffs were hurting demand for its lucrative SUVs such as the US-made GLE.

BMW’s price increase in China was reported earlier by Reuters.

The Spartanburg plant, BMW’s only US factory, exported more than 70 percent of the about 371,000 units manufactured last year.

About one-quarter of BMW X models produced at the US plant went to China, the biggest market for the automaker’s US exports.