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      07-06-2018, 09:07 AM   #1
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BMW to Raise Prices on US Made Models Exported to China

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BMW to Raise Prices on US Made Models Exported to China
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DETROIT, July 6 (Reuters) - German luxury automaker BMW said on Friday that it will be unable to "completely absorb" a new Chinese 25 percent tariff on imported U.S.-made models and will have to raise prices on the vehicles it makes in Spartanburg, South Carolina.

BMW said in a statement 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 profit margins, or hike prices and possibly lose sales.

Ford Motor Co said on Thursday that for now it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China, thus absorbing the additional cost of the tariffs.

German automaker Daimler AG said last month that its 2018 pre-tax profits would fall versus last year because new import tariffs on cars exported from the United States to China would hurt sales of high-margin Mercedes-Benz sports utility vehicles.

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      07-06-2018, 10:08 AM   #2
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Make America Stupid Again...
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      07-06-2018, 10:12 AM   #3
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Make America Stupid Again...
Absolutely
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      07-06-2018, 10:33 AM   #4
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I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
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      07-06-2018, 10:40 AM   #5
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Make America Stupid Again...
All Business, No Bullshit !
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      07-06-2018, 10:40 AM   #6
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Consumers pay for any tariffs & retaliatory tariffs thereafter.
M.A.S.A. indeed...
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      07-06-2018, 10:43 AM   #7
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Quote:
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I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
Cliff notes version: Increased pricing will most likely lead to lower demand. Lower demand = less production = less workers. Net/net this is a loss for BMW and US, specifically the people employed in these US plants.
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      07-06-2018, 10:47 AM   #8
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Quote:
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Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
Cliff notes version: Increased pricing will most likely lead to lower demand. Lower demand = less production = less workers. Net/net this is a loss for BMW and US, specifically the people employed in these US plants.
The US is the largest market by a mile of crossovers and suv's... and with China's recent money; i simply dont see such a demand drop as people might be going on and on about.
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      07-06-2018, 10:56 AM   #9
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Quote:
Originally Posted by Ricfutures View Post
Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
Cliff notes version: Increased pricing will most likely lead to lower demand. Lower demand = less production = less workers. Net/net this is a loss for BMW and US, specifically the people employed in these US plants.
Quote:
Originally Posted by Ricfutures View Post
Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
Cliff notes version: Increased pricing will most likely lead to lower demand. Lower demand = less production = less workers. Net/net this is a loss for BMW and US, specifically the people employed in these US plants.
You really think so? Are you thinking short or long term?

Once there is some pain, all parities will come back to the table. Negotiate. Then things will normalize again. Some products will gain. Others will lose. Same for countries. The question is, who has more to lose? They may end up in a worse deal.
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      07-06-2018, 10:57 AM   #10
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Quote:
Originally Posted by ASAP View Post
Quote:
Originally Posted by Ricfutures View Post
Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
Cliff notes version: Increased pricing will most likely lead to lower demand. Lower demand = less production = less workers. Net/net this is a loss for BMW and US, specifically the people employed in these US plants.
The US is the largest market by a mile of crossovers and suv's... and with China's recent money; i simply dont see such a demand drop as people might be going on and on about.
This makes sense if there are no other options for the Chinese but every other luxury car manufacturer who isn't producing/shipping cars from the US will have better pricing than BMW. I don't think Audi, Mercedes, etc... are going to raise their prices as well.

This distributive form of negotiation works great when there's only 2 parties splitting up the pie. Unfortunately this is a much more complex situation where the Chinese will have similar alternatives that will cost less.
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      07-06-2018, 10:57 AM   #11
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Quote:
Originally Posted by ASAP View Post
Quote:
Originally Posted by Ricfutures View Post
Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
Cliff notes version: Increased pricing will most likely lead to lower demand. Lower demand = less production = less workers. Net/net this is a loss for BMW and US, specifically the people employed in these US plants.
The US is the largest market by a mile of crossovers and suv's... and with China's recent money; i simply dont see such a demand drop as people might be going on and on about.
Quote:
Originally Posted by ASAP View Post
The US is the largest market by a mile of crossovers and suv's... and with China's recent money; i simply dont see such a demand drop as people might be going on and on about.
Right, because increasing the price of any automobile product never has an effect on demand......
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      07-06-2018, 10:59 AM   #12
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Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
China doesn't do this to get itself hurt. BMW maybe.

Logic is simple - Consumers can buy Euro made cars, not necessarily BMW. America will lose GDP due to the loss of sales. Not that USA cares btw.

We feel nothing. We're already accustomed to tariff. That's why M4 base costs 160K USD here after tax. And M4 is pretty pedestrian these days.

And X5M/X6M is a 400K USD tag price (after tax) car here. How about that?
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      07-06-2018, 11:19 AM   #13
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Make America Stupid Again...
What do you mean “again”
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      07-06-2018, 11:27 AM   #14
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How many SAVs are the Chinese buying? They may not be as price sensitive if there is significant brand loyalty. Buick's have been overpriced in China for years yet demand keeps increasing. BMW may start making some SAVs oversees but the US is still the largest market for these vehicles and won't be affected by tariffs.
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      07-06-2018, 11:42 AM   #15
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How many SAVs are the Chinese buying? They may not be as price sensitive if there is significant brand loyalty. Buick's have been overpriced in China for years yet demand keeps increasing. BMW may start making some SAVs oversees but the US is still the largest market for these vehicles and won't be affected by tariffs.
Last year's sales were 537k BMW's in China, compared to 307k in the US. I didn't find a breakout by model, but it looks like the X3 was the second best seller. However it also looks like BMW is starting X3 production in China this year.
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      07-06-2018, 11:53 AM   #16
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Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
Until BMW decides to cut operations in Spartanburg, layoffs and open a factory in China.
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      07-06-2018, 11:55 AM   #17
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Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
What do you think the response is if demand of X4/5/6 was lowered in the world biggest automotive market? BMW cuts German workers?
Think.
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      07-06-2018, 12:01 PM   #18
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Originally Posted by Penguino View Post
Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
Until BMW decides to cut operations in Spartanburg, layoffs and open a factory in China.
https://www.bmwblog.com/2018/03/21/b...off-this-year/
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      07-06-2018, 12:04 PM   #19
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Quote:
Originally Posted by bimmer456 View Post
How many SAVs are the Chinese buying? They may not be as price sensitive if there is significant brand loyalty. Buick's have been overpriced in China for years yet demand keeps increasing. BMW may start making some SAVs oversees but the US is still the largest market for these vehicles and won't be affected by tariffs.
Chinese market is adopting to the trend of SUV and SAVs much faster than you think. Partially due to the increased efficiency of SUVs and some roads not being as smooth as the US and Germany.
Many of the New comers to the EV market targets releasing SUV before a sedan just give you an idea.

The notion that US is the only important SUV market will be short lived. I was in China two months ago, basically the highways are 50% SUV already. In the urban areas, there were more cars. Trump's Strategy of bully and negotion may work towards smaller economies. For China, both side will be hurt, badly.

And if BMW is going to cut jobs due to his policy in Spartanburg, who do you think the voters will turn on? Many Trump supports are blue colar manufacturing workers.

Meanwhile, Xi sits on his emperor throne and decide to rule as long as he wishes.
I don't see Trump winning this in the long term.
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      07-06-2018, 12:04 PM   #20
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Quote:
Originally Posted by Red Bread View Post
Last year's sales were 537k BMW's in China, compared to 307k in the US. I didn't find a breakout by model, but it looks like the X3 was the second best seller. However it also looks like BMW is starting X3 production in China this year.
It appears that 385k of the BMWs sold in China were locally produced BMW-Brilliance models with the big sellers being the 3 Series L with 124k, 120k of the 5 Series L and 90k X1 L's.

http://carsalesbase.com/china-car-sales-data/bmw/

Looks like the "partnership" between BMW and Brilliance is working out well for China.
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      07-06-2018, 01:17 PM   #21
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      07-06-2018, 01:45 PM   #22
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Originally Posted by Penguino View Post
Quote:
Originally Posted by ASAP View Post
I have a tough time understanding this article... the price of US made BMWs going to China will increase? Lol that sounds like a serious hit to China / BMW more so than the USA. BMWs profits as a corporation do not remain in the USA and with the growing economy in China; this hurts BMW and China more so than in any way the US. We are still the largest market for cars coming out of that plant if I am not mistaken... don't worry about the jobs. this would be how a trade war works.
Until BMW decides to cut operations in Spartanburg, layoffs and open a factory in China.

Quote:
Originally Posted by Red Bread View Post
^These two^

BMW (and other companies) are not going to sit around with their dicks in their hands and let childish demigods play with their profits and future. This, and the roll on effects are basic business economics.
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