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Charleston port sees BMW, vehicle exports plunge 35 percent in August

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BMW x5 production

German automaker BMW has started production of the fourth-generation X5 SUV at its Spartanburg County plant. Fewer exports of BMW vehicles at the Port of Charleston are being blamed on the introduction of a new X5 model and slower sales in China because of new tariffs. Provided/BMW

BMW is seeing sharp declines in exports of vehicles it builds in South Carolina as tariffs and a model changeover are taking a toll on overseas sales, prompting the automaker to cut its expected profit margin to the lowest level since the Great Recession.

Vehicle exports from the Port of Charleston, almost exclusively BMWs made in Greer, plunged 35 percent in August compared to a year ago to 10,806, the State Ports Authority reported Wednesday. Vehicle exports are down 31.5 percent in the two completed months since a trade war with China began. That includes a five-year low of 10,152 vehicle exports in July.

The numbers come one day after BMW said it will cut its annual profit guidance to below 8 percent for the first time since 2009. The German automaker blamed the trade tensions between the US and China, its biggest customer, and higher costs in Europe related to stricter emissions standards.

"The continuing international trade conflicts are aggravating the market situation and feeding uncertainty," BMW said in a statement, referring to the 40 percent tariffs China has imposed on U.S.-made vehicles in retaliation for import taxes President Donald Trump placed on $250 billion of Chinese goods.

China is the Port of Charleston's biggest customer, accounting for goods valued $6.3 billion shipped from the local waterfront in 2017. Roughly $2.4 billion of that was for BMWs, with the automaker accounting for four of the top 10 U.S. vehicle exports to China last year.

Jim Newsome, president and CEO of the State Ports Authority, said much of the decline in exports is due to model changes for the fourth-generation X5 SUV, which launched in July. He said customers are reluctant to buy a vehicle when they know a new version is about to be introduced. The X5 was the most popular U.S.-made model in China last year, selling 52,407 vehicles.

"We now have shipments of the new X5, they started coming in last week," Newsome said, adding he expects overall vehicle export totals will catch up as the fiscal year progresses.

Volvo Cars, which recently starting making the S60 sedan at its new plant in Berkeley County, has also said tariffs will hurt business, but the first models won't be exported until early next year.

Vehicle exports aside, the port set a single-month record in August for the amount of containerized cargo moving through its terminals. Imports of cargo shipped in metal containers showed a 16 percent gain in August while exports increased by 2.7 percent.

Newsome said containerized cargo, by far the authority's biggest business segment, has not seen any impacts from tariffs.

"My take is that it is too early to see the impact of that," he said.

The recent increase in imports was attributed to the start-up of a new inland port in Dillon, increased shipments from retailers and the deployment of a second ship capable of hauling up to 13,000 containers to the East Coast, according to Newsome.

Exports haven't grown as fast, he said, because BMW is shipping fewer partially assembled cars overseas.

"This should correct itself as the new X5 production ramps up," he said.

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Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_