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      08-27-2019, 02:50 AM   #1
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How much the China, U.S. trade war will cost BMW, Daimler and U.S. automakers

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By Oliver Sachgau and David Welch
Bloomberg

When China responded to President Donald Trump's trade war with an extra 25 percent tariff on U.S.-made cars in mid-2018, the move cut the number of vehicles exported from America by half.

China dropped the added levies for most of 2019 but is now threatening to bring them back as part of its latest escalation of the tit-for-tat with Trump.

With no signs of the Trump administration's trade war with China ending soon, experts say automakers need to be prepared for volatility and added costs.

While U.S. automakers Ford and Tesla would suffer, a bigger blow would be felt by German companies that build Mercedes-Benz and BMW SUVs at plants in Alabama and South Carolina.

Together, BMW and Daimler sold six of the 10 most popular U.S. vehicles exported to China during 2018.

The trade war cost BMW 300 million euros ($333 million) in 2018, and Mercedes parent Daimler was the first major global corporation to cut profit targets because of trade last year. Yet even companies such as General Motors that produce locally most of the cars they sell in China could be hit by levies on auto parts and further retaliation measures.

Here is a rundown on their exposure to the new tariffs and what they are doing to mitigate the impact.

BMW

BMW in 2018 calculated a full year of tariffs between the U.S. and China would cost it about 600 million euros, though the countries came to an agreement shortly before that scenario was realized. The company makes its entry-level X1 SUV in China through a joint venture with Brilliance China Automotive Holdings and has plans to increase its ownership to 75 percent by 2022.

BMW also moved local production of its X3 SUV to China in May 2018, around the time the first round of retaliatory Chinese tariffs kicked in. Its best seller, the X5, is shipped in ready-to-assemble kits to Thailand before continuing on to China, avoiding any new penalties on U.S. imports. Most exposed is the Spartanburg-made X7, BMW's largest SUV, which has sold well in China.

Between 5 percent and 10 percent of group earnings would be wiped out over a full year, Juergen Pieper, an analyst at Bankhaus Metzler, said in an email. "A second-half recovery would be difficult to achieve."

Daimler

Mercedes-Benz never quantified the earnings impact of the trade war and has faced a range of other problems, including a regulatory crackdown on its diesel cars in Europe and production disruption affecting its popular GLE SUV. It has said additional tariffs may prompt it to consider assembling some SUVs in Southeast Asia, as BMW does with the X5, for export into China.

Mercedes will start local production of its first all-electric SUV, called EQC, in China at the end of this year.

Tesla

Tesla exports its pricey Model S sedan and Model X SUV to China, along with the lower-priced Model 3. About 14 percentof its global output in the first half was sold there, according to Credit Suisse analyst Dan Levy.

CEO Elon Musk has high hopes for the Model 3 in China and has been focused on getting the company's plant in Shanghai running by the end of this year. The Chinese tariffs are due to take effect in December, so the impact will depend on how quickly the plant starts production.

Ford

Ford expects China to become Lincoln's biggest market, surpassing the U.S. over next few years. Almost 10 percent of its sales in China were imported, the vast bulk of them from the U.S. -- including top sellers such as the Mustang sports car and F-150 Raptor pickup truck. Three quarters of Ford's exports to China are Lincoln models, and while all are now made in North America, local production of the Corsair small SUV will begin late this year.

"We encourage the U.S. and China to find a near-term resolution on remaining issues through continued negotiations. It is essential for these two important economies to work together to advance balanced and fair trade," Ford said Friday after the new tariffs were announced.

Avoiding levies is a key reason Lincoln plans eventually to build all its models in China, except for the Navigator SUV, which does not sell in large enough numbers.

"We see China as ground zero for Lincoln, given the size of the market and how well the brand has been received," Bob Shanks, Ford's then-Chief Financial Officer, said in May.

General Motors

The U.S. automaker would have little exposure to the new tariffs. GM does send some American-made parts to China, but the impact is minimal, according to Levy, the Credit Suisse analyst.

The bigger risk to GM and companies with few exports to China is that there could be greater retaliation against their operations in China, or the Trump administration could add tariffs on parts made in China for U.S. vehicles, said Baum, the independent auto analyst.
How much the China, U.S. trade war will cost BMW, Daimler and U.S. automakers

Five to ten percent earnings over a year is somewhat significant. That cost has to be passed onto the consumer, I'm assuming. BMW isn't just going to eat it.
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      08-28-2019, 11:06 AM   #2
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This plus preparation for electrifying the entire BMW lineup is going to change everything.

Their new CEO has got mad responsibility running BMW Group moving forward.
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      08-28-2019, 11:16 AM   #3
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How much the China, Trump trade war will cost BMW, Daimler and U.S. automakers.

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      08-28-2019, 11:18 AM   #4
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This "war" is completely unnecessary. The tariff terms are just nonsense, they do not benefit consumers or companies, in fact, prices of everything are going to skyrocket. US is going to lose this one, thanks to the brilliant plan of Trump to make America great again. He is what you guys voted for anyway.
      08-28-2019, 11:33 AM   #5
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I'm just glad that I bought my 540i in time
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      08-28-2019, 11:38 AM   #6
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How much will it cost you ask?

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      08-28-2019, 11:43 AM   #7
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Quote:
Originally Posted by MetalMK View Post
This "war" is completely unnecessary. The tariff terms are just nonsense, they do not benefit consumers or companies, in fact, prices of everything are going to skyrocket. US is going to lose this one, thanks to the brilliant plan of Trump to make America great again. He is what PUTIN voted for anyway.

last I checked.. America VOTED for Clinton.. who won the popular vote by 3 million.
However.. manipulation of the electoral college .... Don't forget the influence from Russia...
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      08-28-2019, 11:46 AM   #8
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Move this to the politics section please.
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      08-28-2019, 11:54 AM   #9
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Quote:
Originally Posted by M3 Adjuster View Post
last I checked.. America VOTED for Clinton.. who won the popular vote by 3 million.
However.. manipulation of the electoral college .... Don't forget the influence from Russia...
Bingo !
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      08-28-2019, 12:23 PM   #10
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The irony of privileged white Americans with tds crying over cost of luxury goods increasing temporarily to try correct a trade imbalance while majority of their fellow citizens have less than 500 bucks in their bank account

These are the people you're supposed to listen to when they tell you how to vote
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      08-28-2019, 01:01 PM   #11
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Consumer and importer hurt the most.
However, I can't say is bad or good but people living style will change since environment will keep on change.

It is what it is
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      08-28-2019, 01:06 PM   #12
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Quote:
Originally Posted by M3 Adjuster View Post
last I checked.. America VOTED for Clinton.. who won the popular vote by 3 million.
However.. manipulation of the electoral college .... Don't forget the influence from Russia...
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      08-28-2019, 01:42 PM   #13
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Quote:
Originally Posted by ///M TOWN View Post
This plus preparation for electrifying the entire BMW lineup is going to change everything.

Their new CEO has got mad responsibility running BMW Group moving forward.
It already has. Those of us in the industry have been working under these assumptions of trade instability and a huge shift towards electrification, autonomous driving, and new business models for a couple years now.

Most of the OEM's and larger tier ones initiated pretty major reorg's within the last two years to prepare for it. It has not been fun.
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      08-28-2019, 02:27 PM   #14
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Trump 2020 nuff said.
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      08-28-2019, 03:00 PM   #15
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This wouldn't be a problem if you Yankees would just cave to China and continue to give them trillions of dollars like you have been for decades, paid for by US taxpayers.

Since Democrats, Republicans, Germans and the rest of Europe all agree that China has been ripping us off for decades I would Think that Germany would help with the trade war by putting pressure on China Instead of helping them continue to cheat the world.
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      08-28-2019, 04:41 PM   #16
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Quote:
Originally Posted by rajens00 View Post
This wouldn't be a problem if you Yankees would just cave to China and continue to give them trillions of dollars like you have been for decades, paid for by US taxpayers.

Since Democrats, Republicans, Germans and the rest of Europe all agree that China has been ripping us off for decades I would Think that Germany would help with the trade war by putting pressure on China Instead of helping them continue to cheat the world.
Where exactly did you find that US taxpayers are giving China trillions of dollars? US pay for manufactured products from China because they have cheap labour, like how you pay BMW to buy your car. Is BMW ripping you off by you paying them thousands of dollars per month?

It is Trump's fault for starting all this nonsense. And he is the reason that US taxpayers will lose trillions of dollars and get nothing in return.
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      08-28-2019, 05:51 PM   #17
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Quote:
Originally Posted by MetalMK View Post
Where exactly did you find that US taxpayers are giving China trillions of dollars? US pay for manufactured products from China because they have cheap labour, like how you pay BMW to buy your car. Is BMW ripping you off by you paying them thousands of dollars per month?

It is Trump's fault for starting all this nonsense. And he is the reason that US taxpayers will lose trillions of dollars and get nothing in return.
August 1, 2019 - Chuck Schumer offered some rare praise for President Trump on Thursday, amid his decision to slap a 10 percent tariff on $300 billion worth of Chinese goods on Sept. 1.

“We have to be really tough on China. They’ve taken advantage of us,” he said. “America has lost trillions of dollars and millions of jobs because China has not played fair. And being tough on China is the right way to be.”
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      08-28-2019, 07:43 PM   #18
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Quote:
Originally Posted by M3 Adjuster View Post
last I checked.. America VOTED for Clinton.. who won the popular vote by 3 million.
However.. manipulation of the electoral college .... Don't forget the influence from Russia...
Wow, and i thought electoral manipulation is only happening in third world shithole like my country Malaysia.

During our last 2 election, opposition won 57% ofthe popular vote but the corrupt regime was still staying in power. We all know its manipulated.

Luckily our opposition won the last election last year by far more popular vote that electoral manipulation came in no use. Had a smooth and peaceful power transition. Quite rare in a small South East Asian Muslim majority country tho.
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      08-28-2019, 08:02 PM   #19
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Quote:
Originally Posted by rajens00 View Post
August 1, 2019 - Chuck Schumer offered some rare praise for President Trump on Thursday, amid his decision to slap a 10 percent tariff on $300 billion worth of Chinese goods on Sept. 1.

“We have to be really tough on China. They’ve taken advantage of us,” he said. “America has lost trillions of dollars and millions of jobs because China has not played fair. And being tough on China is the right way to be.”
Trump said it? Are Americans that dumb to still believe in what Trump says? Do you also believe that he is going to buy Greenland. What a joke. He just makes things up for the media and for his people to believe that he is winning this war, but most Americans do not realize that he is not. He is the one who started all of this.
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      08-28-2019, 09:01 PM   #20
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Quote:
Originally Posted by M3 Adjuster View Post
last I checked.. America VOTED for Clinton.. who won the popular vote by 3 million.
However.. manipulation of the electoral college .... Don't forget the influence from Russia...
Last I check popular vote has never decided the president of the usa. If you don't understand the rules don't play the game.

Swear it like a 9 year old crying about losing a game of basketball and saying it not fair he lost he made more 2 pointer but lost because the other team made more 3 pointers. Then demand his 2 pointers should count as 4 after the fact.

As for the topic in hand, I don't really care about companies losing money because of bad decisions. Go relocate to south east asia, japan, south korea, or usa if you don't want to pay a traiff
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      08-28-2019, 09:19 PM   #21
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Last I check popular vote has never decided the president of the usa. If you don't understand the rules don't play the game.

Swear it like a 9 year old crying about losing a game of basketball and saying it not fair he lost he made more 2 pointer but lost because the other team made more 3 pointers. Then demand his 2 pointers should count as 4 after the fact.

As for the topic in hand, I don't really care about companies losing money because of bad decisions. Go relocate to south east asia, japan, south korea, or usa if you don't want to pay a traiff
Weak sauce.


It's more like the referees were paid off by the Russians.

Back to topic. Companies are relocating. And we will see how customers respond. There are already people that say in these forums they won't purchase a car built in Mexico. People say that. Will they mean it. ?

As long as you're okay with BMW shifting all North American production to this continent.. then by all means go ahead and let's just add more tariffs to the German manufacturers.
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      08-28-2019, 10:39 PM   #22
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Quote:
Originally Posted by M3 Adjuster View Post
Weak sauce.


It's more like the referees were paid off by the Russians.

Back to topic. Companies are relocating. And we will see how customers respond. There are already people that say in these forums they won't purchase a car built in Mexico. People say that. Will they mean it. ?

As long as you're okay with BMW shifting all North American production to this continent.. then by all means go ahead and let's just add more tariffs to the German manufacturers.
Lol are you still going with that debunk narrative? So how did Russia change any of the results? By spamming people on Facebook with ads? So does that mean hrc who had nearly every major company conspiring with her and the media giving her debate question in advance paying the ref even more? Or are you just still in denial that hrc ran a crap campaign and democrats don't understand how to win presidential elections.

As for Mexico yea the quality from dodge and Toyota products from mexico is subpar, but BMW seems to have a good QC program which has resulted in the SA plant to produce excellent cars. I do believe even in Mexico BMW will continue to produce solid quality vehicals
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