BMW has been warning about the dangers and drawbacks of a trade war between the US and China (or any other major two parties for that matter) for quite some time now. The German company even adjusted its projections for this year, estimating its pre-tax profits to take a hit, as they get ready to lose some serious money following the measures put in place by the US and China regarding import tariffs.
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According to BMW’s CFO, Nicolas Peter, speaking to German magazine Automobilwoche, the loss estimated by BMW for this year hovers around the 300 Million Euros mark, a noteworthy impact, without a doubt. However, if the same tariffs remain in place throughout 2019, the losses could add up to over half a billion Euros for next year, a hit that would force the Germans to reconsider how they do business. One of the first measures will be to scale down production in certain factories, if demand drops.
The main issue in this conflict for BMW comes from the fact that China is a big buyer of SUVs. Since most of them are made at the Spartanburg plant in South Carolina, the imports from the US to China are slowing down drastically due to the taxes imposed on certain products, cars included. As if that wasn’t enough, BMW is also facing some strong headwinds in Europe as well, as the WLTP testing procedure is implemented.
In this case, the problem is the pricing war taking place in the Old Continent. Before the WLTP was enforced – starting September 1 – most car makers dropped the prices for their non-WLTP cars by quite a hefty amount, to sell them before they became illegal. Therefore, the market is now supersaturated with cars, and BMW will have to scale down its production until the situation normalizes, officials repeatedly claiming BMW will not play a part in this ‘pricing battle’.