EU Auto Makers Hit Bumps on Road to Geneva Auto Show

03/04/18 09:15 AM EST
By William Boston 

BERLIN -- European auto executives gather this week for the annual Geneva Motor Show amid a new trans-Atlantic trade rift, stubborn diesel woes, and the threat of new competition.

President Donald Trump, days after stoking a global trade war by announcing steep tariffs on U.S. imports of steel and aluminum, on Saturday revived threats to impose tariffs on auto imports, targeting about a third of all new cars sold in the U.S. and singling out the European Union.

Although Mr. Trump's threats over unfair trade practices raise the volume in the debate, an imbalance in EU-U.S. trade tariffs on auto imports has been at the center of trans-Atlantic trade talks for years. The issue was a hot topic during the trans-Atlantic trade talks during the Obama administration but was left unresolved when Mr. Trump took office and halted the negotiations.

Europe now levies a 10% duty on U.S. auto imports, compared with U.S. tariffs of 2.5% on European exports.

"Trump's tweets are very emotional and not very well thought through, but because Trump makes policy with threats, this threat is dangerous," said Ferdinand Dudenhöffer, director of the Center for Automotive Research at Duisburg University said Sunday.

The fresh row over import tariffs, which could hit profits of European auto makers, adds to the challenges the industry faces as it gathers in Geneva. The auto show opens to the public on Wednesday but is preceded by two days of news conferences and media presentations.

A surprise investment in Daimler AG, maker of Mercedes-Benz cars, by Chinese billionaire Li Shufu last month heightened concerns in Europe about new rivals and power shifting to Asia.

The industry also faces the threat of a widespread ban on diesel vehicles, still nearly half of all new car sales, after a German court recently backed such bans to reduce air pollution.

It is difficult to assess the full impact of higher tariffs on auto imports without further details of the levies, but it is almost certain that any damage wouldn't be limited to European manufacturers.

Imports accounted for 35% of the 17.3 million new cars and light trucks sold in the U.S. last year, Mr. Dudenhöffer said. Most auto makers -- including U.S. manufacturers -- would be hurt if tariffs were imposed on autos manufactured in Mexico for export to the U.S.

General Motors Co., for example, made 2.24 million cars and light trucks in its U.S. plants last year, but sold more than three million in the U.S., suggesting GM imported nearly 800,000 cars to its home market, according to Mr. Dudenhöffer's calculations.

Ford Motor Co. sold roughly 100,000 more vehicles in the U.S. than it produced in its U.S. factories, he added. Fiat Chrysler sold nearly 1 million more vehicles in the U.S. than it produced there. Volkswagen AG, including its Audi and Porsche brands, sold 484,651 more vehicles in the U.S. than it produced, with a large number of those vehicles coming from its Mexican plants. Mercedes imported 42,347 cars into the U.S.

Volkswagen and Daimler weren't immediately available for comment. BMW declined to comment.

Write to William Boston at


(END) Dow Jones Newswires

March 04, 2018 09:15 ET (14:15 GMT)

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