German automaker BMW said it raised its prices on two popular SUVs in China, the world’s largest car market, after Beijing placed tariffs on imports made in America. The price increases are for BMW’s X5 and X6 SUV models with the X5 increasing 4% and the X6 by 7% starting July 30.
The changes in prices were made due to an increase in import duty for cars made in the U.S. said a BMW spokesperson.
Beijing imposed the new duties on American-made vehicles earlier in July in retaliation for measures the U.S. made on Chinese exports valued at $34 million. BMW is the second big automaker to increase prices for vehicles in China, following the move of Tesla.
China is the largest market BMW has. The automaker last year sold 560,000 vehicles, more than in Germany and the U.S. combined. Last year 81,000 BMW vehicles were exported to China from the automaker’s plant in South Carolina, generating sales of nearly $2.4 million.
The South Carolina plant is BMW’s largest worldwide, representing more auto exports than any other manufacturing facility in the U.S.
BMW also builds it vehicles in China through a joint venture it has with Brilliance Automotive a Chinese company and those vehicles do not have an import tariffs.
BMW has announced previously its plans to increase its production in China. However, it said that was due to a rising demand in its vehicles. It also has said that it would not cut jobs or production in South Carolina because of the expansion plans in China
One analyst in Beijing said that increases in prices of as much as 7% mean BMW will still absorb some of the cost of the new tariffs. The analyst added that BMW could make it difficult for its competitors in China to raise their prices by more than what they did, which is a sign it is trying to place pressure on its competitors.
If these tariffs are to remain in place for the long term, the analyst said BMW might consider moving its production of SUVs to Europe from the U.S. as exports from Europe face lower tariffs in China.
Automakers are taking different approaches to the higher import duties. Tesla, which is not currently making any vehicles in China, raised its prices recently across the country by 20%.
Ford said it does not plan at this time to pass the new cost of import duties on to buyers in China and will keep the prices the same.