BMW Courts Trump’s Favor by Showing Off Revamped, American-Made SUV

  • German carmaker to boost spending, jobs at South Carolina site
  • Senator Graham hails plant, says globalization not going away

BMW CEO on U.S. Production and Trade, X7 Model, Brexit

BMW AG is bolstering its best defense against Donald Trump’s trade tiff with Germany, boosting its investment and employment in America and even inviting the president to join the party.

The German automaker unveiled Monday the revamped X3 sport utility vehicle at its plant in Spartanburg, South Carolina, and announced plans to increase spending and create another 1,000 jobs. The facility is BMW’s biggest in the world and an important shield against Trump, who has threatened carmakers over their imports -- and declined the company’s solicitation to attend Monday’s festivities.

“Free trade has made this success story in the U.S. possible,” BMW Chief Executive Officer Harald Krueger said at an event celebrating the factory’s 25-year anniversary. “It is essential for global businesses and economies around the world to flourish.”

Harald Krueger, CE0 at Bayerische Motoren Worke AG, discusses the automaker’s investment in U.S. production.

Source: Bloomberg

The redesigned X3, on sale this fall, will reinforce BMW’s position as America’s biggest car exporter on a net basis, with vehicles worth more than $10 billion shipped abroad per year. While Trump’s early pronouncements targeting carmakers have receded as other political fires consume his time, the growth at the Spartanburg site helps the second-biggest luxury carmaker build goodwill with the White House and guard against the attacks returning.

Free Trade

BMW executives were joined on stage by South Carolina’s Republican governor Henry McMaster, who called the German automaker “the gift that keeps on giving,” and Republican Senator Lindsey Graham, who was more direct in his defense of free trade.

“I’m an American politician who likes German cars,” he told the crowd. Graham -- who said he drives a BMW -- called on Trump to negotiate a trade deal with Europe so the U.S. could export cars there without a tariff, as Mexico does. “To those who fear globalization, embrace it, because it’s not going away.”

Trump singled out BMW in January, threatening to slap the automaker with a 35 percent import duty for foreign-built cars if it proceeded with plans to open a new plant in Mexico, according to German newspaper Bild. He reportedly told European Union officials in a closed-door meeting in May that there would be a stop put on the millions of vehicles German automakers sell in the U.S.

BMW’s production chief Oliver Zipse said he was hopeful the company’s free-trade message would get through to the White House.

“The president is important. Full stop,” he told reporters in South Carolina. “We think logic will prevail; that’s our hope. But of course we’re part of a political arena, and at the end of the day, we will follow politics -- we will not counter politics.”

Investment Plans

BMW has invested $8 billion in the Spartanburg plant since it was announced in 1992 and will spend another $600 million between 2018 and 2021. It’s also plunking down an additional $200 million for employee training and education at the facility, Krueger said.

The factory employs more than 9,000 people, with another 1,000 jobs to be added through 2021. Production climbed to a record 411,000 units last year, with about 70 percent of those vehicles exported.

“The investment automakers make in communities and the jobs they create has been especially important because of Trump,” said Michelle Krebs, an analyst with Autotrader. The X3 is “an important vehicle because it’s in that hot SUV-selling space.”

Redesigned SUV

The model has been a bright spot for BMW in the U.S. this year, with sales jumping 30 percent through May amid a largely flat luxury market. The Spartanburg plant also is getting ready for production of the all-new X7, which will debut late next year.

The overhauled X3 is decked out with new technology including optional hand-gesture control and a driver-assistance system that helps drivers change lanes and maintain distance from other motorists.

Tech may not be enough, however, to shake the perception that BMW’s cautious styling decisions are contributing to market share losses against rival Mercedes, which has widened its sales lead over BMW in the U.S. this year. Consumer perceptions of the BMW brand are average or slightly above average, and the points it earns on styling have been in decline since 2010, according to Kelly Blue Book’s Brand Watch metrics.

In addition to Spartanburg, BMW plans to produce some X3s at its Rosslyn plant in South Africa and at a facility in Dadong, China, a decision that was made two years ago in order to free up more of the domestically made models for the U.S. market, Krueger said in a discussion with reporters.

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