Will US tariffs kill the UK car industry?
Discussion
I know that we don’t have any significant British owned car companies but there are still some companies based here eg Lotus, AM and McLaren.
I just read that Lotus have stopped exports to the US and are about to lay off 270 people.
AM always seem like they are just one step ahead of the corporate grim reaper and I imagine that losing US sales could cause them to trip and get (metaphorically) scythed!
McLaren got some breathing room with recent announcements but hardly doing well.
Add to the list of things to hate Trump for.
I just read that Lotus have stopped exports to the US and are about to lay off 270 people.
AM always seem like they are just one step ahead of the corporate grim reaper and I imagine that losing US sales could cause them to trip and get (metaphorically) scythed!
McLaren got some breathing room with recent announcements but hardly doing well.
Add to the list of things to hate Trump for.
This fella's (I think he may post on here from time to time as he has a fine collection of cars?) reports are excellent- highly recommended...
https://ssoreport.com/auto-tariffs
https://ssoreport.com/auto-tariffs
Robertb said:
This fella's (I think he may post on here from time to time as he has a fine collection of cars?) reports are excellent- highly recommended...
https://ssoreport.com/auto-tariffs
Even worse than I thought for McLaren as US is 45% of their sales!!https://ssoreport.com/auto-tariffs
Insane US policy. There should be an exemption for small manufacturers as manufacturers with less than half a million sales in the US will never set up there. But there is of course no logic to what Trump is doing.
The paras in the article on price vs volume and Ferrari settling on a not-more-than 10% rise is particularly interesting.
Given the margins in car manufacture and distribution its hard to see it being worth exporting to the US. This has interesting implications for new and used car supply in the US and inflation.
Given the margins in car manufacture and distribution its hard to see it being worth exporting to the US. This has interesting implications for new and used car supply in the US and inflation.
Skeptisk said:
I know that we don’t have any significant British owned car companies but there are still some companies based here eg Lotus, AM and McLaren.
I just read that Lotus have stopped exports to the US and are about to lay off 270 people.
AM always seem like they are just one step ahead of the corporate grim reaper and I imagine that losing US sales could cause them to trip and get (metaphorically) scythed!
McLaren got some breathing room with recent announcements but hardly doing well.
Add to the list of things to hate Trump for.
Ignoring ownership, the thing that matters is the people who are employed in the UK to make cars that end up in the USA. I just read that Lotus have stopped exports to the US and are about to lay off 270 people.
AM always seem like they are just one step ahead of the corporate grim reaper and I imagine that losing US sales could cause them to trip and get (metaphorically) scythed!
McLaren got some breathing room with recent announcements but hardly doing well.
Add to the list of things to hate Trump for.
Basically Jaguar....Land Rover.... mind you Jaguar have paused production, so maybe they might say ah f
k that...Toyota seem to be particularly clever at having local manufacturing to cope with the risks of exchange rates and the like.
Robertb said:
The paras in the article on price vs volume and Ferrari settling on a not-more-than 10% rise is particularly interesting.
Given the margins in car manufacture and distribution its hard to see it being worth exporting to the US. This has interesting implications for new and used car supply in the US and inflation.
Probably difficult decisions as who knows how long the tariffs will last? If they stop importing then their dealers could go bankrupt or move to other brands, which could then be very costly to replace once the tariffs are lifted. Given the margins in car manufacture and distribution its hard to see it being worth exporting to the US. This has interesting implications for new and used car supply in the US and inflation.
I suspect in the short term they will get to sell all stock actually in the US before importing any more.
Skeptisk said:
Probably difficult decisions as who knows how long the tariffs will last? If they stop importing then their dealers could go bankrupt or move to other brands, which could then be very costly to replace once the tariffs are lifted.
I suspect in the short term they will get to sell all stock actually in the US before importing any more.
Car dealers seem to change brands, or go multiple-brands quite easily.I suspect in the short term they will get to sell all stock actually in the US before importing any more.
Yes, the US is by far the biggest market for traditionally UK brands (regardless of ownership nationality). If significant tariffs stick for a meaningful length of time, it will decimate those brands, their factories, and all the UK jobs they support.
It’s an infuriating situation that can only end badly for everyone. It’s not a zero-sum game, despite what those thickos in power and their simpleton acolytes think.
It’s an infuriating situation that can only end badly for everyone. It’s not a zero-sum game, despite what those thickos in power and their simpleton acolytes think.
The point on price elasticity is interesting... thinking it through, suppose all imported prestige brands pass on the full 25%?
The US consumer can either buy some locally produced thing for less, which is not a Bentley, McLaren, Porsche, Range Rover, Ferrari, etc, or just suck up the extra cost. There is less substitution effect with the premium European brands, other than between themselves eg BMW vs Audi.
The question is one of demand destruction generally as price increases.
The US consumer can either buy some locally produced thing for less, which is not a Bentley, McLaren, Porsche, Range Rover, Ferrari, etc, or just suck up the extra cost. There is less substitution effect with the premium European brands, other than between themselves eg BMW vs Audi.
The question is one of demand destruction generally as price increases.
Robertb said:
The point on price elasticity is interesting... thinking it through, suppose all imported prestige brands pass on the full 25%?
The US consumer can either buy some locally produced thing for less, which is not a Bentley, McLaren, Porsche, Range Rover, Ferrari, etc, or just suck up the extra cost. There is less substitution effect with the premium European brands, other than between themselves eg BMW vs Audi.
The question is one of demand destruction generally as price increases.
I suspect most wealthy Americans would suck up the extra 25% rather than switch to a domestic brand. Same with those who like a nice bottle of malt etc.The US consumer can either buy some locally produced thing for less, which is not a Bentley, McLaren, Porsche, Range Rover, Ferrari, etc, or just suck up the extra cost. There is less substitution effect with the premium European brands, other than between themselves eg BMW vs Audi.
The question is one of demand destruction generally as price increases.
I think volume mass market exports will suffer much more than premium products. British Steel will cost the UK taxpayer loads.
Skeptisk said:
Even worse than I thought for McLaren as US is 45% of their sales!!
Insane US policy. There should be an exemption for small manufacturers as manufacturers with less than half a million sales in the US will never set up there. But there is of course no logic to what Trump is doing.
If some of those McLaren buyers decide that due to the price differential, they'll get the Corvette instead, then there's your logic. Insane US policy. There should be an exemption for small manufacturers as manufacturers with less than half a million sales in the US will never set up there. But there is of course no logic to what Trump is doing.
Judging by the increased amount of export bound JLR crap I’ve seen, heading dockwards in the last couple of weeks, I’d say not. The importers are ( obviously) trying to bring everything forward, so there’s still a survivable market. They just have to grow a pair, and hunker down for now.
Skeptisk said:
If I were CEO of McLaren or AM I would be lobbying hard for some sort of de minimis exemption from the tariffs eg no tariffs on the first 5000-10000 cars imported.
Given the US has dropped de minimus from postal deliveries, I doubt they would be in favour of it for $100k+ cars.SFTWend said:
Robertb said:
The point on price elasticity is interesting... thinking it through, suppose all imported prestige brands pass on the full 25%?
The US consumer can either buy some locally produced thing for less, which is not a Bentley, McLaren, Porsche, Range Rover, Ferrari, etc, or just suck up the extra cost. There is less substitution effect with the premium European brands, other than between themselves eg BMW vs Audi.
The question is one of demand destruction generally as price increases.
I suspect most wealthy Americans would suck up the extra 25% rather than switch to a domestic brand. Same with those who like a nice bottle of malt etc.The US consumer can either buy some locally produced thing for less, which is not a Bentley, McLaren, Porsche, Range Rover, Ferrari, etc, or just suck up the extra cost. There is less substitution effect with the premium European brands, other than between themselves eg BMW vs Audi.
The question is one of demand destruction generally as price increases.
I think volume mass market exports will suffer much more than premium products. British Steel will cost the UK taxpayer loads.
It's the 45th anniversary of that album. Released this very day, 11th April, in 1980.
(Have a think: What did your old man drive then?!)
Do people in the market for new McLarens in the US care about cost? Wouldn't it actually even potentially make it even more of a status symbol?
JLR and the like yes, they may suffer. JLR are in the middle of their weird reinvention though so I'm sure some of the board will be glad of an excuse for failure should it go that way. Every cloud.....
JLR and the like yes, they may suffer. JLR are in the middle of their weird reinvention though so I'm sure some of the board will be glad of an excuse for failure should it go that way. Every cloud.....
Jambo2000 said:
Do people in the market for new McLarens in the US care about cost? Wouldn't it actually even potentially make it even more of a status symbol?
JLR and the like yes, they may suffer. JLR are in the middle of their weird reinvention though so I'm sure some of the board will be glad of an excuse for failure should it go that way. Every cloud.....
Yes. You'll see the term Veblen goods used on this forum for just the event you describe.JLR and the like yes, they may suffer. JLR are in the middle of their weird reinvention though so I'm sure some of the board will be glad of an excuse for failure should it go that way. Every cloud.....
It's an interesting case of exception to the rule. File under topics like niche, counterintuitive, unintended consequence or, possibly, grotesque. More here.
Pit Pony said:
Ignoring ownership, the thing that matters is the people who are employed in the UK to make cars that end up in the USA.
Basically Jaguar....Land Rover.... mind you Jaguar have paused production, so maybe they might say ah fk that...
Toyota seem to be particularly clever at having local manufacturing to cope with the risks of exchange rates and the like.
I remember Tesla fan boys telling me Toyota would be gone in 10 years. In 2016. Well it's not quite been 10 years but I'd say they've often found themselves on the right side of things ... Almost like they know what they're doing.Basically Jaguar....Land Rover.... mind you Jaguar have paused production, so maybe they might say ah f
k that...Toyota seem to be particularly clever at having local manufacturing to cope with the risks of exchange rates and the like.
SFTWend said:
Robertb said:
The point on price elasticity is interesting... thinking it through, suppose all imported prestige brands pass on the full 25%?
The US consumer can either buy some locally produced thing for less, which is not a Bentley, McLaren, Porsche, Range Rover, Ferrari, etc, or just suck up the extra cost. There is less substitution effect with the premium European brands, other than between themselves eg BMW vs Audi.
The question is one of demand destruction generally as price increases.
I suspect most wealthy Americans would suck up the extra 25% rather than switch to a domestic brand. Same with those who like a nice bottle of malt etc.The US consumer can either buy some locally produced thing for less, which is not a Bentley, McLaren, Porsche, Range Rover, Ferrari, etc, or just suck up the extra cost. There is less substitution effect with the premium European brands, other than between themselves eg BMW vs Audi.
The question is one of demand destruction generally as price increases.
I think volume mass market exports will suffer much more than premium products. British Steel will cost the UK taxpayer loads.
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