BMW To Build More X5s In Thailand To Sidestep China Tariffs

The US-China trade war that began this summer is starting to claim collateral victims. Since the Asian country is the world’s largest car market, automakers who build cars in the United States are faced with a 40 percent tariff if they want to sell those vehicles in China – and they are not happy about it.

While most luxury car manufacturers have assembly plants in China, they can’t build all their models there, thus they will be forced to import them from other countries and take the tax hit.

BMW is one of the most exposed automakers to China’s tariffs because the German carmaker builds most of its SUVs in the United States, at the Spartanburg plant in South Carolina.

However, the company seems to have found a way to sidestep tariffs: it will simply build more SUVs at its Thailand facility.

The Bavarian firm announced it is manufacturing between 10,000 and 20,000 X5 sport utility vehicles in Thailand to meet demand from China. BMW started producing the previous-generation X5 in Thailand in the spring of 2016, and the plant there is capable of building a “significant portion” of the vehicles the company would have otherwise exported from the US to China.

In a call to discuss the company’s second-quarter results, CEO Harald Krueger told analysts ramping up production in Thailand was one action to counteract the tariffs.

In related news, BMW today pledged to significantly expand its manufacturing footprint in China, the company’s largest growth market. The BMW Group and Brilliance Automotive Group have agreed to further expand their BMW Brilliance Automotive (BBA) joint venture, which will export the all-electric iX3 SUV to markets outside of China.

In addition to the expansion of the BBA joint venture, the BMW Group has signed an agreement with Great Wall Motor to build electric MINI vehicles in China through a 50:50 joint venture. The new company will also build EVs for GWM.

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  • pcurve

    wow, totally didn’t see this coming /s

    • bd0007

      BMW had been worried that something like this would arise – so they already had made moves to start X3 production at their plant in South Africa.

      Would not be surprised if they increase X3 production there due to the tariff situation.

  • CJKnox

    Technology is to the point now where any product can be assembled anywhere; China, Timbuktu, USA it doesn’t matter the product will be the same as the processes are not location dependent.

    That’s one of the issues with raising tariffs too high; companies will just move production elsewhere.

    • saagnikpaul

      I don’t think you understand. “companies will just move production elsewhere” is of course true. and the Chinese know that. The Chinese motive behind raising tariff was not to hurt BMW. It was to hurt the US economy. Which it will. As lesser cars will be built in the spartanburg factory. This will in turn push to US to reduce tariff on Chinese imports which the buffoon increased to 25% earlier this year.

  • fabri99

    So, a trade war against China is backfiring? Shocking.

  • bd0007

    Actually, the orange one is [stupid] – would be immensely wealthier if he had simply placed his inheritance into an index fund rather then running various business endeavors into the ground (including the defunct professional football league, the USFL – which was doing pretty well for itself until Drumpf decided it was a “good idea” to go head-to-head w/ the NFL).

    Drumpf had no clue in running casinos, an airline, etc.(nor was he interested) – and he really also has little clue about the real estate industry (who else though it was a “great idea” to start a mortgage company right when the RE bubble was about to pop – bringing forth the Great Recession?).

    • ME

      Lefties shouldn’t be evil name callers, don’t forget your PC pills.

  • Ron

    Wrong. He is stupid and this will hurt SC which helped to put him in office. It’s a bit ironic.

    • ME

      Take your PC pills.

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