beijingwalker
ELITE MEMBER

- Joined
- Nov 4, 2011
- Messages
- 65,187
- Reaction score
- -55
- Country
- Location
Mercedes, BMW, Porsche May LoseMost In EU-China Tariff Row
MOTORINGOn Oct 3, 2023

The European Union’s probe into Beijing’s electric-vehicle subsidies is meant to protect its carmakers from a flood of cheap Chinese cars.
But if it leads to tit-for-tat tariffs, Mercedes-Benz Group and BMW’s biggest moneymakers will be most exposed.
For Germany’s high-end manufacturers, including Porsche, China has proven an insatiable market for their most expensive models, such as the Mercedes S-Class, BMW 7-Series and Porsche Cayenne Sports Utility Vehicle (SUV).
Those vehicles, however, are mainly imported, putting them in the line of fire if Beijing retaliates against any EU measures.
“Those who live in glass houses shouldn’t throw stones,” Bernstein analysts Daniel Roeska and Eunice Lee said in a research note. The three German luxury-carmakers are at greatest risk of taking a big hit should the trade dispute escalate, they said.
China is the biggest destination for Germany’s most expensive vehicles. Last year, the country accounted for more than a third of global sales of BMW’s 7-series and Mercedes’ S-Class.
The 1.47-million-yuan ($201,000) ultraluxury Maybach built by Mercedes ships more than 1,000 times a month from Chinese showrooms.
For Volkswagen Group subsidiary Audi, China made up more than a third of global sales. Last year, the carmaker exported to China more than 10,000 of its A8 luxury sedans, which are made exclusively in Neckersulm, Germany.
Roeska and Lee estimate that Chinese revenue streams represent more than 25 per cent of the German automakers’ underlying net income.
For some higher-volume models such as smaller and mid-sized sedans, BMW and Mercedes have local manufacturing partnerships that allow them to sell those cars without the current 15 per cent import tariff.
But, their high-end models are generally produced in Europe and North America.
Mercedes sold more than 750,000 cars in China last year, of which just over 20 per cent were imported. BMW shipped in about a third of Chinese deliveries while Porsche does not build any cars in China.
The exposure has only increased in recent years as the carmakers, faced with supply chain logjams, focused resources on making and selling their highest margin vehicles.
Under Ola Kallenius, the Chief Executive Officer (CEO), Mercedes has been pursuing a luxury-first strategy, partly modeled on the company’s sales profile in China.
Mercedes, BMW, Porsche May LoseMost In EU-China Tariff Row – Independent Newspaper Nigeria
Independent.ng - Nigeria News - Top Nigerian newspapers - Breaking news - Top news headlines from Nigeria and World.
