Friday, June 29, 2018

Trump Tariff Could Spell the End of Niche Euro Cars in the US

By:  Sam McEachern
The Trump Administration’s proposed 25 percent import tariff on vehicles manufactured within the European Union could lead to low-volume European models being axed in the US.
An anonymous senior executive at an unnamed European carmaker spoke to Reuters this week, telling the news agency that Trump’s 25 percent tariff would ruin the business case for many niche luxury models. Convertibles, which sell in low numbers in the US and are expensive to manufacture, would be hit the most heavily. If the tariffs were implemented, European automakers would likely be forced to consolidate production of their convertible models in order to reduce costs and make up for lost sales.
Further putting the future of luxury convertible models in jeopardy is the fact they don’t sell well in the world’s largest car market, China. This is mostly due to pollution levels and heat, Reuters points out.
One solution would be to move production of convertible models from the EU to the US, but this too presents challenges. The complicated logistics involved with moving production of a vehicle from one country to another makes such an endeavor rather expensive – again ruining the business case for these cars.
The sales of other vehicles types, such as BMW’s M line of performance cars and Mercedes’ AMG portfolio, may be affected as well – though to a lesser extent due to the larger sales figures and stronger margins on such models.
It’s so far not clear if the import tariffs will materialize.

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