BMW said it is raising prices on Spartanburg County-built vehicles sold in China to help offset some of the impact tariffs are having on the automaker's costs of doing business in that country, according to numerous reports Monday.
A price hike of between 4 percent and 7 percent on BMW's X5 and X6 SUVs — both made in the Upstate — was to take effect Monday, countering part of a 40 percent tariff China is imposing on U.S.-made cars. The tariff — which China boosted from 15 percent to 40 percent — is retaliation for earlier border taxes President Donald Trump approved on Chinese made goods sent to the U.S.
"BMW stands for free [trade] but can’t stand still without taking actions to respond to the market changes," a BMW spokeswoman told the Reuters news agency in an email.
The X5 is the most popular U.S.-made vehicle sold in China, with 44,800 sales projected for this year. Sales of the X6 account for about one-fifth of that total, according to analyst LMC Automotive.
Meanwhile, the number of vehicles exported from the Port of Charleston dropped 10.3 percent in the fiscal year that ended June 30. BMW exports about 70 percent of the vehicles it builds in the Upstate and accounts for nearly all of the cars leaving the Columbus Street Terminal for foreign markets.
The second consecutive year of declining vehicle exports is not related to the tariffs, which took effect July 6, but is a result of BMW retooling an assembly line and launching new SUV models at the Greer campus.
Production at the site was down roughly 10 percent in 2017 to about 371,000 vehicles. That was the lowest production total since 2014. Production through the first half of 2018 is trailing the same period a year ago.
A BMW spokeswoman did not respond to The Post and Courier's request for comment.
The tariff-related price increases follow BMW's announcement this month that it will increase annual production capacity at its two China plants to 520,000 vehicles by 2019. That would surpass Spartanburg County's capacity of 450,000 vehicles, making China the world's largest producer of BMWs.
BMW sent more than 81,000 of its Upstate-made SUVs to China in 2017 — accounting for more than one-third of the plant's vehicle exports from the Port of Charleston. A Bloomberg News report said the boost in China production will help BMW lower its reliance on those exports.
Jim Newsome, president and CEO of the State Ports Authority, said he expects BMW will remain the largest exporter of finished vehicles at the port while increasing the number of partially assembled cars it exports in containers. The so-called knocked-down vehicles are sent overseas in cargo boxes to avoid tariffs other countries impose on finished vehicles.
Newsome said the decline in BMW exports is largely due to the redesigned models, adding: "When you announce a new model, people stop buying the old model. Nobody wants the last year of the old model."
BMW, which employs roughly 10,000 people at its Upstate plant, isn't the only South Carolina automaker to feel the impact of tariffs. Volvo Cars will begin production of an S60 sedan this fall at its $1.1 billion manufacturing campus near Ridgeville, and CEO Hakan Samuelsson said tariffs could slow hiring at the plant.
Volvo has said it plans to hire up to 4,000 people, but fewer exports will mean less workers. The company, based in Sweden but part of China's Geely Holding Group, has said it eventually plans to export half of the 150,000 cars it will build each year at the plant.
Daimler, meanwhile, said tariffs will hurt profits and could force the automaker to shift some production from the U.S. to China. The company's Mercedes-Benz Vans division is building a $500 million plant in North Charleston, but the Sprinter vans produced there won't be exported overseas.
John Zeng, a forecaster with LMC automotive, told Bloomberg News that he expects automakers will change productions sites if the trade war continues.
“If BMW and Mercedes see the price raise affecting their sales, they will change the manufacturing location,” Zeng told the news service.