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BMW vehicles built at the automaker's Upstate campus are ready for export at the Port of Charleston's Columbus Street Terminal. BMW exports about 70 percent of the vehicles it builds in South Carolina. File/Staff

Automobile sales in China fell in July as demand for SUVs like those built at BMW's Spartanburg County plant softened in the wake of tariffs that are raising manufacturers' costs.

Vehicle sales fell 4 percent from a year ago to 1.89 million in the biggest global automotive market, the China Association of Automobile Manufacturers reported. Sales of SUVs, usually a bright spot, were down 8.4 percent.

BMW — which has raised prices on South Carolina-made SUVs exported to China — said it remains committed to expansion plans for its South Carolina plant, the automaker's largest in the world, the top vehicle exporter in the United States and a major customer at the Port of Charleston.

But Harald Kruger, BMW's chairman, told analysts in a conference call that the company has long-term plans to produce more cars in different global regions to help balance distribution.

"This gives us greater flexibility in the current trade disputes," Kruger said, adding "we are looking at different scenarios and are taking advantage of opportunities in the major regions."

Kruger said BMW will be "expanding and strengthening our business in China over the long term."

Auto demand in China has cooled amid forecasts of an economic downturn after Beijing tightened controls on bank lending to cool surging debt. The country's mounting tariff fight with U.S. President Donald Trump has added to the anxiety, though the economic impact so far is limited.

Beijing imposed additional 25 percent import duties on U.S. made autos as part of its retaliation for a similar American increase. BMW is among the hardest-hit by tariffs because of its heavy reliance on exports of South Carolina-made SUVs to China. American automotive brands build most of their vehicles in Chinese factories.

BMW said last week that second-quarter earnings in the company's automotive sector fell 14.5 percent compared to a year ago. That financial reporting period pre-dates the tariffs, with BMW blaming the decline on unfavorable exchange rates and higher spending on technology, such as autonomous cars and electric vehicles.

On Friday, BMW said it will withhold delivery to China of about 400 X4 SUVs built at its Greer plant. The delay is due to a potential brake problem that's part of a worldwide recall, according to Reuters.

More than one of every five BMWs built in the Upstate last year were sent to China, the automaker's top market, according to Kruger. Exports to China accounted for 81,186 vehicles worth $2.37 billion. BMW was China's second-largest luxury brand last year behind Audi.

All told, BMW exported more than 270,000 vehicles to foreign markets in 2017, most of them sent through the Port of Charleston.

 

The Associated Press and Reuters contributed to this report.