BMW has had to raise prices of some SUV models in China due to higher duties being imposed on imports from the U.S. The move by China to raise import duties from 15% to 40% was in response to tariffs (worth US$34 billion) imposed by the Trump administration against China-made goods.
The X5 and X6 SUV prices are now between 4% to 7% higher, with the impending launch of the new X4 to be similarly affected as BMW makes most of its SUVs in Spartanburg, South Carolina. Rival Mercedes-Benz has also been reported to have raised prices of its American-made GLS and GLE models while Tesla likewise with its Model X and S.
The irony is that China has just recently introduced wide-ranging tariff cuts in July covering an array of consumer goods including automobiles; a move to open its market further to imported goods. In fact, China will remove the cap on foreign ownership of car makers by 2022; the limit stands at 50% currently.
As the trade war escalates, it remains to be seen which superpower will blink first. But as the world’s largest consumer of automobiles – over 28 million new vehicles were registered last year – the implications could be severe for both sides if the situation persists. Closer to home, the Malaysian government is said to be considering imposing restrictions on foreign car brands even though Perodua and Proton command 50% of the market share, with the remainder constituted mainly by brands that produces and assembles cars locally.