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Reuters
FRANKFURT/PARIS
A US warning that it may introduce tariffs on foreign auto imports hit shares in German carmakers BMW, Daimler and Volkswagen, which together control more than 90 percent of the North American premium auto market.
The shares fell on Thursday after President Donald Trump's administraton opened a trade probe into whether vehicle imports had damaged the US auto industry.
That could lead to 25 percent tariffs on the same"national security"grounds used to impose US steel and aluminium duties in March. The DIHK, Germany's main chambers of commerce group, described the latest move as a"provocation".
BMW and Daimler shares dropped as much as 3.5 percent, while Volkswagen's stock fell 3.2 percent. Renault, exposed to the US market via its 43.4 percent stake in Nissan, fell as much as 2.1 percent.
The share declines do not reflect the full gravity of the threat, analysts pointed out, because the outcome of the trade review is uncertain and still months away.
"Donald Trump is obviously not thinking about how to prevent a trade war,"said Thomas Altmann at Frankfurt asset manager QC Partners."Import duties on cars would be a nightmare for the German auto industry and would lead to a massive sales impact."
BMW said it was"committed to free trade worldwide", adding that barrier-free access to markets was a key driver of"growth, welfare and employment throughout the global economy".
Spartanburg, South Carolina is home to BMW's biggest global plant, shipping 70 percent of its output overseas to make the German carmaker the leading US vehicle exporter by value.
Mercedes maker Daimler said it was"monitoring the situation carefully", while Audi and Porsche parent Volkswagen did not immediately respond to messages seeking comment.
If the review ultimately led to new tariffs the disruption to the car industry and its supply chains would be global, and keenly felt by the Germans.
Announcing the probe, US Commerce Secretary Wilbur Ross cited"evidence that, for decades, imports from abroad have eroded our domestic auto industry".
EU passenger car imports from the United States were worth 6.2 billion euros ($7.3 billion)last year, while the bloc's US exports topped 37 billion euros, according to Brussels-based industry association ACEA.
BMW and Mercedes have expanded production capacity in the United States. But along with VW and Audi they have also invested billions in Mexico factories to supply the US market.
German automakers assembled 804,000 cars in US plants last year but exported another 657,000 to North America from Germany, according to the VDA industry association.
The US production figure represents a 29 percent increase over three years, the association emphasized, while German exports were down 25 percent. However, German brands increased Mexico production by 46 percent in 2017, mostly for the US
"The German auto industry is watching current developments closely and with concern,"the VDA said, adding that its carmakers and suppliers employed 116,500 US workers.
China, which has just reduced its own car import tariffs, was at pains on Thursday to welcome German firms and investments, with Premier Li Keqiang talking up relations after a meeting with German Chancellor Angela Merkel.
Volvo Cars, the Geely-owned automaker currently preparing its stock-exchange debut, could also be hit hard. While the Swedish brand is currently opening a US factory to build S60 sedans, it will remain reliant on on imports of its Chinese-built XC90 flagship SUV for years under current plans.
"Volvo believes strongly in the benefits of investing and contributing to the main markets in which it seeks to sell cars, and we are investing and creating thousands of jobs in South Carolina,"it said, declining to share import projections.
"We'll always adapt to the realities of the market,"Volvo Chief Executive Hakan Samuelsson said in Detroit earlier this year, when asked about the threat of US tariffs.
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25/05/2018
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