BMW users in China would have to part with more money for two US-made SUVs as announcements by German carmaker BMW has confirmed that the company will increase prices of two U.S.-made crossover sport-utility vehicles in the China market.
The additional cost comes as BMW will need to balance up for the high tariffs it will be required to pay in China for its made-in-USA products. Effective by Monday, according to a statement released over the weekend by BMW, the prices on its retail stand to increase by 4% for the very popular X5 and 7% for the X6 SUV models. There has been no hint by the car maker about increment as regards the BMW X4 model.
What makes the price hike important
By this price increment, BMW has shown interest in taking care of the increased cost of getting these SUVs from its plant in South Carolina to China. This is a clear indication of the high level of competition amongst luxury automobile makers. The Sino-American trade row, which saw the Chinese government's imposition of new tariffs on about $34 billion of U.S. imports, ranging from soybeans, lobsters, and automobiles, earlier this month, necessitated BMW's price increments.
Tariffs on all other imported automobiles into China were reduced by Beijing this year, with exception to made-in-USA cars which had an additional 25 percent levy as of July 6. This brings the import duty placed on every car imported from the USA by China to 40 percent.
A BMW spokesperson said that “BMW stands for free (trade) but can’t stand still without taking actions to respond to the market changes,” according to Reuters. Almost all Chinese BMW SUVs: X4, X5, and X6 crossover are manufactured in the United States. In China lately, there is a surge in the car market for SUV demands and the German automaker the previous year had shipped into China more than 100,000 vehicles from the US.
Ford and Mercedes Benz have already responded
The American automaker Ford Motor Company (F.N) had earlier on said it will not increase prices of Ford vehicles in China at the moment, in an effort to sustain its business momentum. This is almost mirrored in BMW’s decision to accommodate almost all the fallouts from the higher tariffs slammed on cars from the USA by China.
Car dealerships in China while reaching out to Reuters, had said that the sister German automaker Mercedes Benz, operated by Daimler AG, had made moderate increments in the price of its GLE sporty midsize SUV which is produced in the state of Alabama in mid-July. Daimler’s chief executive Dieter Zetsche said last Thursday that the carmaker was considering ways to mitigate the impact of the Sino-American trade war, which would include a review of possibilities of shifting some U.S. production to China.
Daimler also said last week its 2018 pre-tax profits would fall from last year because the new Chinese import tariffs would definitely hurt the sales of Mercedes-Benz SUVs.