[evanevery]

Originally Posted by Skilly

This!!

Also read a great article on the core of this half baked plan regarding moving manufacturing back to the US...

None of this is going to move manufacturing back to the USA.

No one in the USA is going to work for the competitively LOW WAGES that some of these other countries can easily support. At least not without a massive recession/depression which leaves a lot of unemployed people desperate to put food on the table at any cost. Maybe that's the master plan after all?

...and we are going to get it from "both ends" as domestic companies are only going to raise their product pricing to take advantage of short term profits. This won't be about investment into domestic production, it will be about short-term domestic profit taking. Why invest excess profitability into building factories that no one will work in when you can simply put the money into your pocket?

This is EXACTLY what happened 8 years ago when this administration did the same with Steel/Aluminum tariffs.

[supershaft]

my SA says I'll have a wagon for 2026 allocation July/August delivery and BMW is still mum on how the tariffs will be passed on to me.

[soulsea]

Originally Posted by supershaft

my SA says I'll have a wagon for 2026 allocation July/August delivery and BMW is still mum on how the tariffs will be passed on to me.

What tariffs?

[iifymbro]

Originally Posted by soulsea

What tariffs?

[Skilly]

Originally Posted by evanevery

None of this is going to move manufacturing back to the USA.

No one in the USA is going to work for the competitively LOW WAGES that some of these other countries can easily support. At least not without a massive recession/depression which leaves a lot of unemployed people desperate to put food on the table at any cost. Maybe that's the master plan after all?

...and we are going to get it from "both ends" as domestic companies are only going to raise their product pricing to take advantage of short term profits. This won't be about investment into domestic production, it will be about short-term domestic profit taking. Why invest excess profitability into building factories that no one will work in when you can simply put the money into your pocket?

This is EXACTLY what happened 8 years ago when this administration did the same with Steel/Aluminum tariffs.

yup, fully agree. The math is simple too...even with the 104% tariffs they just applied to China.

You own an athletic apparel company. Your current arrangement is $4 to produce a shirt that you sell for $25. And you source the shift itself from China for $1 each. with the added tariff cost your shirt now cost $2 but to manufacture it in the US it would cost you $10...the ONLY thing the tariff does is raise that shirt price to $30 but it DOES NOT move a company to consider a US supplier. Period.

Same goes for other items. The iPhone is already $1000 - do they expect the US consumer to purchase a US sourced product and pay $3000 for the same goods? All you have accomplished on 90% of the scenarios is a solid way to choke out the consumer with an increased price and drive inflation to overall send us into recession.

And, this whole notion that the fed will come in and save the day. If history is an indicator, the fed may step in but not the way we want. Their bell weather is inflation more than anything. So while the economy retracts, if costs of goods remain high, they wont lower interest rates; more likely they will stall on any action or perhaps raise them.

I made a comment earlier about true costs. I stand on that. I think except the little guy, there has been a LOT of price hikes from business because of world events and we didn't see deflation once supply chains re-established. The only thing that this might do is drive costs down and reverse some of the cash grabs that have taken place. Not sure that happens while we artificially choke the supply chain out though.

As I write this Trump froze tariffs and the market surged 2200 points. I wonder how many of his inner circle knew that was coming - would LOVE to see the trading patterns of the administration and congress before that announcement.

[Skilly]

Originally Posted by EUPremier

On what planet has the US economy been on a decline? ��.

Let me clarify - this is in context a thread referencing American Manufacturing and when it really began to decline. "American made" hasn't really been a thing for a long time and has been declining since the 70s.

[Bluex]

I hate to burst anyone's bubble here (like some in the G80 forums that don't quite get it), but this 90 day "reprieve" in tariffs does not include the auto tariffs, as of right now. They are still in place.

[mjr24]

Originally Posted by Skilly

yup, fully agree. The math is simple too...even with the 104% tariffs they just applied to China.

You own an athletic apparel company. Your current arrangement is $4 to produce a shirt that you sell for $25. And you source the shift itself from China for $1 each. with the added tariff cost your shirt now cost $2 but to manufacture it in the US it would cost you $10...the ONLY thing the tariff does is raise that shirt price to $30 but it DOES NOT move a company to consider a US supplier. Period.

Same goes for other items. The iPhone is already $1000 - do they expect the US consumer to purchase a US sourced product and pay $3000 for the same goods? All you have accomplished on 90% of the scenarios is a solid way to choke out the consumer with an increased price and drive inflation to overall send us into recession.

And, this whole notion that the fed will come in and save the day. If history is an indicator, the fed may step in but not the way we want. Their bell weather is inflation more than anything. So while the economy retracts, if costs of goods remain high, they wont lower interest rates; more likely they will stall on any action or perhaps raise them.

I made a comment earlier about true costs. I stand on that. I think except the little guy, there has been a LOT of price hikes from business because of world events and we didn't see deflation once supply chains re-established. The only thing that this might do is drive costs down and reverse some of the cash grabs that have taken place. Not sure that happens while we artificially choke the supply [...]

Yes, definitely, some people made some cash off today…..very suspicious.

[Crazy1323]

Originally Posted by Stockholmarn

50%? I would be surprised if they have over 10%.

Prepare to be surprised

BMW NA has a MUCH higher margin on a single car than 10% if you’re just looking at what BMW NA is charged by Germany vs what they sell it to a dealership for. That is not to say that BMW NA has a higher profit margin than that as a whole though.

For example, BMW NA’s main source of revenue is the sale of vehicles to dealers (not counting BMW FS) and from the manufacture and sale of vehicles built in South Carolina. From those profits they have to cover ALL their expenses. This includes warranty claims, maintenance included on new vehicles, marketing, training, logistics (how cheap do you think it is to ship a car from port in Germany to a dealer in the US. They have to cover the costs of their own HQ, the distribution facilities.

There are billions of dollars of costs to cover those expenses.

It would not surprise me at all to see that BMWNA’s whole sale price from BMW Germany is 50-60% of MSRP. They then sell these to dealers at 93% of MSRP, so that 43-33% spread is where they have to make their profits.

[Skilly]

Originally Posted by Crazy1323

Prepare to be surprised

BMW NA has a MUCH higher margin on a single car than 10% if you’re just looking at what BMW NA is charged by Germany vs what they sell it to a dealership for. That is not to say that BMW NA has a higher profit margin than that as a whole though.

For example, BMW NA’s main source of revenue is the sale of vehicles to dealers (not counting BMW FS) and from the manufacture and sale of vehicles built in South Carolina. From those profits they have to cover ALL their expenses. This includes warranty claims, maintenance included on new vehicles, marketing, training, logistics (how cheap do you think it is to ship a car from port in Germany to a dealer in the US. They have to cover the costs of their own HQ, the distribution facilities.

There are billions of dollars of costs to cover those expenses.

It would not surprise me at all to see that BMWNA’s whole sale price from BMW Germany is 50-60% of MSRP. They then sell these to dealers at 93% of MSRP, so that 43-33% spread is where they have to make their profits.

yup, this! Although, that still isn't enough to absorb a 25% tariff. So that fed cash grab will reach the street.

[EUPremier]

There’s no way Trump will be able to make the 25% auto tariffs stick. And the proof of that lies in today’s back-tracking. I cannot see any way how he could sustain the depression the policy will generate once major economies really go to war on this. All it seems to have taken is a US Bonds to take a wobble and he backed away.
Imagine if it got really bad??

[Stockholmarn]

Originally Posted by Crazy1323

Prepare to be surprised

BMW NA has a MUCH higher margin on a single car than 10% if you’re just looking at what BMW NA is charged by Germany vs what they sell it to a dealership for. That is not to say that BMW NA has a higher profit margin than that as a whole though.

For example, BMW NA’s main source of revenue is the sale of vehicles to dealers (not counting BMW FS) and from the manufacture and sale of vehicles built in South Carolina. From those profits they have to cover ALL their expenses. This includes warranty claims, maintenance included on new vehicles, marketing, training, logistics (how cheap do you think it is to ship a car from port in Germany to a dealer in the US. They have to cover the costs of their own HQ, the distribution facilities.

There are billions of dollars of costs to cover those expenses.

It would not surprise me at all to see that BMWNA’s whole sale price from BMW Germany is 50-60% of MSRP. They then sell these to dealers at 93% of MSRP, so that 43-33% spread is where they have to make their profits.

Does make sense that BMW NA would buy at a reduced ex works price. I was thinking more of the bottom line profit for BMW Group. Looks like it about 5%. Dealer margin seems low to me since I regularly get at least 10% off msrp but it's obviously a different setup here in the old world.

We can probably agree that absorbing these levels of tax for any extended period woudl be unsustainable for most importers of higher end refined goods.

[WWM3]

Originally Posted by EUPremier

There’s no way Trump will be able to make the 25% auto tariffs stick. And the proof of that lies in today’s back-tracking. I cannot see any way how he could sustain the depression the policy will generate once major economies really go to war on this. All it seems to have taken is a US Bonds to take a wobble and he backed away.
Imagine if it got really bad??

They are here to stay IMO. The key economic brain trust of the administration wants consumers to pay more for these types of goods and the country to consume less. This is why they are so focused on trade deficits.

[Stealth7]

On the bright side, may be fewer Hankook oem tires on new G90s... .

[TN_3]

Originally Posted by supershaft

my SA says I'll have a wagon for 2026 allocation July/August delivery and BMW is still mum on how the tariffs will be passed on to me.

How do you have a MY26 touring allocation? No additional allocations beyond the initial batch of MY25s have been released as far as I am aware. Is your dealer just assuming he will receive additional allocations?

[Aimster82]

So let's say an M5 goes from $130K to ... $150K ...

One way BMWNA can fight the tariffs is to raise the prices and offer 0% for 60 months or 0% MF for the lease. I don't know how car companies are able to do this, but I assume it's with having lots of cash on hand.

[AmuroRay]

Originally Posted by evanevery

None of this is going to move manufacturing back to the USA.

No one in the USA is going to work for the competitively LOW WAGES that some of these other countries can easily support. At least not without a massive recession/depression which leaves a lot of unemployed people desperate to put food on the table at any cost. Maybe that's the master plan after all?

...and we are going to get it from "both ends" as domestic companies are only going to raise their product pricing to take advantage of short term profits. This won't be about investment into domestic production, it will be about short-term domestic profit taking. Why invest excess profitability into building factories that no one will work in when you can simply put the money into your pocket?

This is EXACTLY what happened 8 years ago when this administration did the same with Steel/Aluminum tariffs.

Not that I care either way, because I think this all a farce. But to say it can’t happen or doesn’t work - why do EU countries have a robust manufacturing industry? Why can’t America?

[Crazy1323]

Originally Posted by Stockholmarn

Does make sense that BMW NA would buy at a reduced ex works price. I was thinking more of the bottom line profit for BMW Group. Looks like it about 5%. Dealer margin seems low to me since I regularly get at least 10% off msrp but it's obviously a different setup here in the old world.

We can probably agree that absorbing these levels of tax for any extended period woudl be unsustainable for most importers of higher end refined goods.

In the US it is not uncommon to see dealerships sell a single vehicle for less than invoice price. Dealerships are willing to do this for two reasons:

1) manufacturers provide incentives to dealers typically based on volume. This is completely hypothetical number, but let’s say that BMW told a dealer “we will give you a $100k incentive if your dealership sells 50 5-Series this month. The dealer may be willing to sell those for $1,000 less than their invoice price (losing $50k), but if they think that is the best way to sell 50 of them the would net $50 ($100k incentive less the $50k loss). A lot of times dealerships will “punch” cars to hit monthly or quarterly incentives. For example a dealership is 2 vehicles short of an incentive, the dealership will essentially sell the vehicle to themselves to use as a demo, employee car, or loaner. This starts the warranty and is considered a sale. The next month the dealer may sell those as “used” vehicles taking a slight loss, but the loss was much less than the incentive they got.

2) Beyond manufacturer incentives, a dealership typically has higher profits on service. The more vehicles they sell the more they can make on service, especially BMW since they know the vehicles will be coming tot the dealership for the first few years and BMW will pay the dealership.

Finally, a dealership may sell below invoice because they are making it up on backend deals from financing or the sale of captive warranty products (wheel and tire, etc.)

[Skilly]

Originally Posted by AmuroRay

Not that I care either way, because I think this all a farce. But to say it can’t happen or doesn’t work - why do EU countries have a robust manufacturing industry? Why can’t America?

Where should we start… Fundamentally, the U.S. and European economic systems operate in entirely different ways.

The U.S. embraces a form of capitalism that prioritizes free markets above all else — including, the wellbeing of its citizens. There’s a strong emphasis on individual entrepreneurship, minimal government intervention, and fewer regulations. The system rewards short-term profits and shareholder value. Europe, on the other hand — and especially countries like Germany — leans toward a more coordinated form of capitalism. Even calling it “capitalism” feels like a stretch in some ways. There are strong social contracts in place, where governments, employers, and labor unions work together more intentionally. The focus is on consensus-building, long-term planning, and, most importantly, social welfare.

In the U.S., people are often treated as a cost center — with systems designed to make hiring and firing easy, and significant investment going into keeping labor flexible and replaceable. In contrast, European systems prioritize co-determination, apprenticeship programs, and investments in workforce development.

At a high level, one model is built around short-term profit, and the other around long-term sustainability.

Germany is perhaps the clearest example of this difference. It has maintained a deliberate industrial strategy for decades, making long-term investments in key sectors like automotive to ensure their stability and competitiveness. These strategies are supported by layered systems — vocational training is robust and deeply integrated into its economy. Education isn’t treated as a profit center, making these pathways far more accessible than in the U.S.

In contrast, the U.S. depends on market forces. When manufacturing became less profitable, it's outsourced or automated. The U.S. also lacks a structured system for trade or skills training, so it has no reliable pipeline of skilled manufacturing talent. And since the system doesn't value them, short of union protections and bargaining, you find wages start at $7.25 - hardly a way to motivate your best and brightest; more praying on a lack of opportunity.

The bottom line is Europe (especially Germany) chose to protect and nurture manufacturing as a core part of its economy. The U.S. allowed market forces to reshape its economic base around services and technology — and let manufacturing largely disappear.

[chicagofan00]

Originally Posted by Skilly

Where should we start… Fundamentally, the U.S. and European economic systems operate in entirely different ways.

The U.S. embraces a form of capitalism that prioritizes free markets above all else — including, the wellbeing of its citizens. There’s a strong emphasis on individual entrepreneurship, minimal government intervention, and fewer regulations. The system rewards short-term profits and shareholder value. Europe, on the other hand — and especially countries like Germany — leans toward a more coordinated form of capitalism. Even calling it “capitalism” feels like a stretch in some ways. There are strong social contracts in place, where governments, employers, and labor unions work together more intentionally. The focus is on consensus-building, long-term planning, and, most importantly, social welfare.

In the U.S., people are often treated as a cost center — with systems designed to make hiring and firing easy, and significant investment going into keeping labor flexible and replaceable. In contrast, European systems prioritize co-determination, apprenticeship programs, and investments in workforce development.

At a high level, one model is built around short-term profit, and the other around long-term sustainability.

Germany is perhaps the clearest example of this difference. It has maintained a deliberate industrial strategy for decades, making long-term investments in key sectors like automotive to ensure their stability and competitiveness. These strategies are supported by layered systems — vocational training is robust and deeply integrated into its [...]

Very well stated and spot on.

[AmuroRay]

Originally Posted by Skilly

Where should we start… Fundamentally, the U.S. and European economic systems operate in entirely different ways.

The U.S. embraces a form of capitalism that prioritizes free markets above all else — including, the wellbeing of its citizens. There’s a strong emphasis on individual entrepreneurship, minimal government intervention, and fewer regulations. The system rewards short-term profits and shareholder value. Europe, on the other hand — and especially countries like Germany — leans toward a more coordinated form of capitalism. Even calling it “capitalism” feels like a stretch in some ways. There are strong social contracts in place, where governments, employers, and labor unions work together more intentionally. The focus is on consensus-building, long-term planning, and, most importantly, social welfare.

In the U.S., people are often treated as a cost center — with systems designed to make hiring and firing easy, and significant investment going into keeping labor flexible and replaceable. In contrast, European systems prioritize co-determination, apprenticeship programs, and investments in workforce development.

At a high level, one model is built around short-term profit, and the other around long-term sustainability.

Germany is perhaps the clearest example of this difference. It has maintained a deliberate industrial strategy for decades, making long-term investments in key sectors like automotive to ensure their stability and competitiveness. These strategies are supported by layered systems — vocational training is robust and deeply integrated into its economy. Education isn’t treated as a profit center, making these pathways far more accessible than in the U.S.

In contrast, the U.S. depends on market forces. When manufacturing became less profitable, it's outsourced or automated. The U.S. also lacks a structured system for trade or skills training, so it has no reliable pipeline of skilled manufacturing talent. And since the system doesn't value them, short of union protections and bargaining, you find wages start at $7.25 - hardly a way to motivate your best and brightest; more praying on a lack of opportunity.

The bottom line is Europe (especially Germany) chose to protect and nurture manufacturing as a core part of its economy. The U.S. allowed market forces to reshape its economic base around services and technology — and let manufacturing largely disappear.

I appreciate the explanation, but it didn't answer the last part of my question which was "Why can’t America?" Why can't America change and start developing their own industry?

[Skilly]

Originally Posted by AmuroRay

I appreciate the explanation, but it didn't answer the last part of my question which was "Why can’t America?" Why can't America change and start developing their own industry?

It does, but I think you missed it:

1. They can
2. it would take an entire shift in policy (not tariffs) and measurements of success - worker protections; training; capital investments; government participation.
3. This shift would take years and reduce profit (their current focus); and new administrations can destroy it all with an executive order (see the current admin). The US, with great examples happening in real-time, is untrustworthy for long term investment like this.
4. The US system is too short term in their thinking