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BMW moves prices of American-made SUVs in China



  Can the US win a trade war with China?

BMW raises prices in China as global trade tensions escalate.

The German automaker said it has raised the prices of two popular sport utility vehicles in the world's largest auto market after China put tariffs on imports from the US. Prices for its X5 and X6 models have risen 4% and 7% since Monday.

The price changes were made because of "increased import tax for cars manufactured in the US," said a spokeswoman for BMW ( BAMXF ) .

Beijing imposed new tariffs on American vehicles earlier this month to repay US measures against 34 billion Chinese exports. BMW is the second large automaker to increase prices in China after Tesla ( TSLA ) .

China is the largest market of BMW. The German company sold 560,000 cars there last year ̵

1; more than the United States and Germany combined.

Last year, BMW exported around 81,000 vehicles from its plant in South Carolina to China, selling around $ 2.4 billion. It is the largest BMW plant in the world responsible for more car exports than any other manufacturing facility in the US.

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China is the largest market for BMW. There, the German company sold 560,000 cars last year.

The company also builds cars in China through a joint venture with the local company Brilliance Automotive. These vehicles are not subject to import duties.

BMW has already announced plans to increase production in China, but this is due to the growing demand for vehicles. It also said that it would not cut South Carolina production or jobs because of Chinese expansion plans.

Tu Le, head of market research firm Sino Auto Insights, said that price increases of up to 7% mean that BMW is still paying a part of the cost of higher fares.

It could also make it difficult for BMW's competitors in China to increase their own prices by more than that amount, he said. "BMW could try to pressure other automakers."

If the tariffs remain long-term, Le said that BMW could consider moving SUV production from America to Europe, where exports to China are associated with lower tariffs.

Car manufacturers have adopted different approaches to managing higher import duties. Tesla, which is not currently producing in China, has recently raised its car prices in the country by about 20%.

Ford ( F ) has stated that it does not currently intend to pass on the new import duties to buyers in China and to maintain its prices.

Daimler ( DDAIF ) warned last month that the new Chinese tariffs would hit its profits, resulting in "less-than-expected SUV sales and higher-than-expected costs "would result. But these costs are not fully passed on to customers, the company added.

CNNMoney (Hong Kong) First published July 30, 2018: 4:48 pm ET

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