The trade-war between the US and China is starting to show the first casualties on the economics front. Even though both sides claim that taxing the products exchanged between them is only fair and done in retaliation to what the other side is enforcing, nothing good will come of it. Right now, cars made in the US and imported into China can be subjected to import taxes of up to 40% which means manufacturers like BMW have to find ways to go around them, to make sure they still have a business in the following years.
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BMW banked big on its production facility in Spartanburg, South Carolina. The plant located in the US will soon become its largest in the world, as it is currently expanding to be able to manufacture about 450,000 units per year. All of the cars built here are SUVs and account for most of the models sold in the world, understandably so. Some of the X cars are built in other plants in Europe, as well as South Africa but other parts of the world too, such as Thailand.
In Thailand, BMW has been making a small variety of cars for some time now and they are done using kits which are simply put together in the Asian country. In the near future, most of the production in the Rayong region of the state will be made up of BMW X5 models which will then be shipped to China, to avoid getting taxed. This way, BMW will manage to keep its customers happy and its profit margins intact.
Whether this solution will work on the long term remains to be seen but according to BMW they will build about 20,000 X5 SUVs in Thailand per year, which will surely not be enough to cope with the demand in the world’s largest car market. Therefore, some of the cars currently assembled there might be phased out in the future, to make room for more SUV production. At the moment, the Thailand location is assembling 9 different BMW models, from the 1 Series, to the 3 Series, 5 Series, 7 Series, X1, X2, X3, X4 and, of course, X5.