Berlin - United States
President-elect Donald Trump warned German car companies he
would impose a border tax of 35 percent on vehicles imported to
the US market, a plan that drew sharp rebukes from Berlin and
hit automakers' shares .
In an interview with German newspaper Bild, published on
Monday, Trump criticised the German carmakers for failing to
produce more cars on US soil.
"If you want to build cars in the world, then I wish you all
the best. You can build cars for the United States, but for
every car that comes to the USA, you will pay 35 percent tax,"
Trump said in remarks translated into German.
"I would tell BMW that if you are building a factory in
Mexico and plan to sell cars to the USA, without a 35 percent
tax, then you can forget that," Trump said.
Volkswagen shares fell 2 percent, and shares in
Daimler and BMW both fell 1.8 percent by
1033 GMT.
Trump has turned his fire on automakers who manufacture cars
in Mexico, a growing production centre where costs are lower. He
has warned Japan's Toyota it could be subject to a "big
border tax" if it builds its Corolla cars for the US market at
a planned factory in Mexico.
All three German carmakers have invested heavily in
factories in Mexico, with an eye to exporting smaller vehicles
to the U.S. market.
At the same time, German carmakers have quadrupled light
vehicle production in the United States over the past seven
years to 850,000 units, more than half of which are exported
from there, the German VDA automotive industry association said.
Read also: Toyota stocks tumble after Trump criticism
"In the long term, the United States would be shooting
itself in the foot by imposing tariffs or other trade barriers,"
VDA President Matthias Wissmann said in a statement.
Serious warning
Speaking in tabloid newspaper Bild, German Economy Minister
Sigmar Gabriel said that rather than trying to penalise German
carmakers, the US should instead respond by building better
and more desirable cars.
Norbert Roettgen, head of Germany's foreign affairs
committee, said Berlin needed to take Trump's comments on the
possible border tax seriously.
"He seems to be absolutely focused on short-term job
interests and security interests ... not that he is looking for
free trade so much, but more for protection," Roettgen told
Reuters.
Mercedes-Benz and BMW already have sizeable factories in the
United States where they build higher-margin sports utility
vehicles (SUVs) for export to Asia and Europe.
Around 65 percent of BMW's production from its factory in
Spartanburg, South Carolina is exported overseas. BMW builds the
X3, X4, X5 and X6 models in the United States.
"It is surprising that Trump singles out the carmaker that
exports more vehicles from the United States than any other
manufacturer," analysts at Evercore ISI said.
A BMW spokeswoman said a BMW Group plant in the central
Mexican city of San Luis Potosi would build the BMW 3 Series
starting from 2019, with the output intended for the world
market. The plant in Mexico would be an addition to existing 3
Series production facilities in Germany and China.
Read also: Trump policies create financial-crisis risks
In June last year, BMW broke ground on the plant, pledging
to invest $2.2 billion in Mexico by 2019 for annual production
of 150,000 cars.
Daimler has said it plans to begin assembling Mercedes-Benz
vehicles in 2018 from a $1 billion facility shared with
Renault-Nissan in Aguascalientes in Mexico. A
spokesman for Daimler declined to comment on Trump's remarks.
Last year, VW's Audi division inaugurated a $1.3 billion
production facility with 150,000 vehicle production capacity
near Puebla, Mexico. Audi said it will build electric and petrol
Q5 SUVs in Mexico.
Audi declined comment on Monday.
Volkwsagen also declined to comment on Trump's remarks but
pointed out it was investing another $900 million in its U.S.
plant in Chattanooga, Tennessee.
Trump called Germany a great car producer, noting that
Mercedes-Benz cars were a frequent sight in New York, but
claimed there was not enough reciprocity.
Germans were not buying Chevrolets at the same rate, he
said, calling the business relationship an unfair one-way
street.
Chevrolet sales have fallen sharply in Europe since parent
company General Motors in 2013 said it would drop the
Chevrolet brand in Europe by the end of 2015. Since then, GM has
focused instead on promoting its Opel and Vauxhall marques.