BMW still preaches free trade as Trump tariff threat lingers

By BLOOMBERG

MUNICH • BMW AG will keep spreading the gospel of free trade and back its rhetoric up by investing more in its massive US plant, all as the Trump administration mulls higher tariffs on imported autos.

The German automaker is presenting two SUVs at the Los Angeles auto show this week: A refreshed X5 crossover and a new three-row model, the X7, that’s BMW’s biggest SUV ever. Both will be made in the the company’s factory in South Carolina, CEO Harald Krueger said in a Bloomberg Television interview.

“Our strategy is quite clear: We are producing the products in the main markets, and the main market for the X7 is the US,” he said. “Our business model is based on free trade across the globe, which definitely helps in creating wealth.”

BMW is considering building engine and transmission plants in the US, he later told reporters, without providing any details. The company has weighed such a move in the past.

Krueger is trying to navigate trade wars waged by US President Donald Trump and the possibility of a chaotic Brexit, all of which has hampered supply chains for a company that depends on the free flow of goods across borders.

BMW’s return on sales from automaking almost halved in the third quarter, and the company cited impact from tariffs as well as pricing pressure.

Higher vehicle levies will take a €300 million (RM1.42 billion) bite out of 2018 earnings, CFO Nicolas Peter said earlier this month. The China-US trade spat alone is likely to cost the company €600 million a year on X models.

Krueger said he’s increasing output in China because of stronger demand for models like the X3, not because of the trade war between the US and China.