Auto industry caught inside trade war crosshairs

The trade war comes along at a particularly bad time for BMW. The automaker recently authorized a $1 billion expansion for its plant in Spartanburg, South Carolina, its largest manufacturing complex inside planet. The move was intended to create about 1,100 completely new jobs with the addition of the all-completely new X7 design, BMW’s largest along with most expensive SUV yet.

“We’re proceeding full speed ahead,” said Oleg Satanovsky, a BMW spokesman, despite the automaker having previously warned which which might cut back on the project if a global trade war breaks out.

nevertheless Satanovsky was quick to add which “We will wait along with see” what happens with the dispute in China, as which market was required to be a critical one for the completely new X7 flagship, as well as the X5. Last year, Chinese motorists bought 52,407 X5s, generating which the single most well-known American-made vehicle sold in which country. The BMW X3 wasn’t far behind, with sales of 34,609.

BMW can be caught in a tough spot as trade barriers rise, having no facility currently capable of taking on production of its X types inside short-term, nevertheless the spokesman suggested which can be studying “a lot of options” which might have to take if the dispute stretches on. along with the need to act could become even more dire if the Trump administration follows through with threats to impose completely new sanctions on European auto imports, a move which could all nevertheless certainly bring rapid retaliation.

Mercedes can be the second-largest exporter of U.S.-made vehicles to China, the GLE generating 40,304 sales last year, while its GLS along with R-Class types are inside top 10 list, as well.

For its part, the Stuttgart, Germany-based automaker can be trying to keep a low profile as the trade war heats up. A spokesman for Mercedes’ parent Daimler told the Reuters news service which the company can be “working with the relevant authorities to resolve the issue,” which has sidelined its GLE along with GLS types at the Shanghai port, describing the issue as “entirely technical.”

The automakers “don’t want to get caught inside middle of a polarized situation,” said David Cole, the chairman-emeritus of the Center for Automotive Research, in Ann Arbor, Michigan. “They don’t want to be seen as being on one side or another.”

nevertheless there seems to be little they will be able to do to avoid getting caught up inside dispute, Cole along with additional observers said. along with which could create an escalating series of challenges which only begin with higher sanctions. The issue facing Mercedes could be just the first step in delaying or outright blocking the shipment of American-made vehicles into China.

Meanwhile, analyst Phillippi worries which Chinese authorities could turn up the heat on U.S.-based manufacturers, General Motors, Ford, Fiat Chrysler along with Tesla, in particular. “You could see a derailment of investment programs for expansion plans which have to be approved by the Chinese government,” he said.

GM can be the second-largest automotive any in China, behind Volkswagen, along with which can be constantly upgrading along with expanding its plants. Ford was a relative latecomer to the market along with has been struggling to catch up. Its Chinese design line-up can be out-of-date along with which can be getting ready to launch a completely new wave of products, including the Territory SUV revealed which week. Fiat Chrysler Automobiles was also a latecomer along with needs to expand its relatively limited Chinese production base. along with Tesla only last month confirmed plans to build its first assembly plant in Shanghai.

With relatively little effort, Chinese authorities could tie up all these programs, even cancel them outright, according to experts familiar with the way the country operates. Considering the vast size of the Chinese automotive market, such setbacks could prove disastrous.

nevertheless “both countries’ automotive industries could get hurt if the trade war escalates,” adds Phillippi.

The Chinese market imports relatively few foreign-made vehicles, the various trade barriers which have infuriated the Trump administration effectively limiting imports to specialty along with high-end types. nevertheless China doesn’t export all which many vehicles, either. Until recently, Chinese plants struggled just to keep up with domestic demand. As the growth of the home market slows, however, which seems likely to change.

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