German Carmakers to Boost China Output as Tariffs Threaten Competitiveness
Wu Ziyu
/SOURCE : Yicai
German Carmakers to Boost China Output as Tariffs Threaten Competitiveness

(Yicai Global) July 10 -- Germany's luxury automakers are following their US and Japanese counterparts in raising and moving production to China as brewing trade tensions between China and the US may disrupt vehicle imports.

Tariffs Beijing imposed in retaliation for new US import duties will "drag down the competitiveness of imported cars" and maybe affect how the market develops, Cui Dongshu, secretary-general of the China Passenger Car Association, said in an interview with Yicai Global.

The US started levying an extra tax on USD34 billion worth of Chinese goods on July 6. China responded with a 25 percent duty on cars brought in from the States. BMW and Mercedes-Benz ship a large number of their sport utility vehicles from the US, while Audi's mainly come from Europe, according to data from the China Association of Automobile Manufacturers.

One way for automakers to hedge against the new tariffs is by shifting production to China. BMW and its local partner Brilliance Automotive Group Holdings plan to lift capacity at two plants in China, the Munich-based company said yesterday. BMW has already said it will have to raise its US-made vehicle prices in China because of the new tariffs.

BMW started joint ventures this year with two Chinese partners, Great Wall Motors and Brilliance Automotive, to make BMW-branded vehicles in three local factories in 2019. Daimler, the parent of Mercedes-Benz, expanded its investment with state-owned BAIC Group in February to build another plant for luxury electric cars, while Audi took a 1 percent stake in SAIC Volkswagen last month to start making cars locally.

China decided to ease foreign-ownership restrictions in April, which means that overseas automakers can eventually buy out their local partners and take full control of their operations in the country. 

Editor: Emmi Laine

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Keywords: Market Analysis , Luxury Vehicle , BMW , Mercedes-Benz , Audi , Import Tariff , China-US Trade Dispute , Trade War , German Cars