"Build better cars" German vice-chancellor snaps back at Trump
- Author: Regina Walsh Jan 17, 2017,
Jan 17, 2017, 0:41
The shot at USA automakers came after Trump criticized German automakers for failing to produce more cars on US soil in an exclusive interview with the German newspaper BILD, published Monday.
While making investments in Mexico, carmakers from Germany have quadrupled production of light vehicles in the USA the last seven years to more than 850,000 units, with over 50% of them exported.
BMW stated on Monday that it would stick to its plans to produce cars in Mexico because the output is aimed at the world market, thus, the auto factory in Mexico will complement. the production plants in China and Germany.
"It is surprising that Trump singles out the carmaker that exports more vehicles from the United States than any other manufacturer", said a report from Evercore ISI. "The US auto industry would have a bad awakening if all the supply parts that aren't being built in the US were to suddenly come with a 35% tariff".
On the issue of German auto trade, Donald Trump said, "If you go down Fifth Avenue every one has a Mercedes Benz in front of his house, isn't that the case?".
I would tell BMW if they want to build cars in Mexico and sell in the United States of America without a 35% tax, they can forget it. The plant in Mexico would be an addition to existing 3 Series production facilities in Germany and China.
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In an interview he said: "I would tell them to not waste their time and money unless they want to sell to other countries". The automaker plans to begin building the BMW 3 Series sedan there in 2019.
"Production is destined for the world market", BMW said on Monday responding to Trump's attack on its Mexico facility.
Like most vehicle manufacturers, German automakers have also expanded production in Mexico, where labor and global trade are cheaper than the U.S. In 2016 the plant produced more than 410,000 cars, and the company plans to invest another $1 billion to expand output to 450,000 vehicles annually.
BMW's insistence that it would not need to sell models in the U.S. is highly unusual, with nearly all Mexican plants heavily dependent on United States sales.
After Trump's threats of tariffs, Ford has given up a plan to build a $1.6 billion plant in Mexico and instead promised to create 2,000 jobs in the US. Wissman said in a statement that it was unclear whether Trump's tariff threat would turn into actual policy, and whether such a policy would have the political support to pass through Congress.
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