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BMW Production Shift to China Pays Off with Jump in X3 Sales

Making the vehicle locally helps avoid a 15% Chinese import tariff.

BMW AG reported a 33% sales jump in China during May after a shift to local production of its X3 sport utility vehicle boosted deliveries, defying a year-long pullback in the world’s largest automotive market.

Making the X3 locally helps avoid a 15% Chinese import tariff on cars that were previously shipped in from BMW’s Spartanburg plant in South Carolina. The move also reduces the risk to the German automaker should trade tensions lead to additional levies. Last year, China temporarily hiked tariffs on U.S.-made cars to 40%. BMW said those measures cost it 300 million euros (US$338 million) in profit last year.

Higher sales in China lifted overall deliveries at BMW by 4.6%, outpacing premium rivals Mercedes-Benz and Audi, which have struggled with model changeovers and a steep decline in the Chinese market after almost three decades of growth. Sales at Audi, owned by Volkswagen AG, fell 7.4% in China and 5.4% overall. For Daimler AG-owned Mercedes, sales fell 0.9% in the country and 1.3% overall in May.

BMW is in a battle with Mercedes-Benz for leadership in the luxury segment, with a goal to regain the top spot globally by next year. For the first five months of 2019, Mercedes has sold some 66,000 more cars. Still, BMW has closed the gap, with sales rising 1.6% for the first five months, compared with declines of 4.7% at Mercedes and 5.8% for Audi.

By Oliver Sachgau

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