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How tariffs in China could cause a meltdown in the American South

While BMW is clearly a German company, the crossovers that are exceedingly important to it are actually made in Spartanburg, South Carolina. And more than that, the Spartanburg plant (physically located in the town of Greer) is where the corporate know-how and capability for those vehicles is concentrated. These are the vehicles – specifically, the BMW X3, X4, X5, X6, X7 – that drove record growth for the company in 2018, according to BMW. But whatÂ’s most notable about BMW Group Plant Spartanburg, given current events, is that according to the U.S. Department of Commerce it was the largest automotive exporter by value for the fifth year running in 2018. ThatÂ’s worth emphasizing: largest automotive exporter by value. Not GM. Not Ford. BMW. And where might one assume that more than a few of those X vehicles are shipped to? China. Some 360 miles southwest of Spartanburg is Mercedes-Benz U.S. International, Inc., in in Tuscaloosa County, Alabama. It started building vehicles in 1997. Since then, Daimler AG has invested in excess of $5.5 billion in the facility. It manufactures the crossover now known as the GLE, formerly the ML-Class. It also makes the GLE coupe and GLS. Daimler describes the Tuscaloosa facility as “the traditional home of SUV production” for those vehicles. When it reported its global 2018 sales, Daimler noted that on a global basis SUVs account “for more than a third of all Mercedes-Benz sales.” According to the Chinese finance ministry, on December 15th the Chinese government will impose a 25% tariff on automobiles (and a 5% tariff on auto parts) from the U.S. Certainly this is going to have a direct effect on the sales of vehicles that are manufactured in the U.S. and exported to China. BMW and Mercedes are going to take it on the chin for the vehicles that they make in plants that they invested in so heavily in the U.S. Which could potentially mean that people in places like Greer, South Carolina, and Vance, Alabama, are going to find themselves in the crosshairs of the combatants. Soo too could Lincoln, which produces vehicles in places like Louisville, Kentucky (Navigator), Chicago, Illinois (Aviator) and Flat Rock, Michigan (Continental). Although the Tesla Gigafactory 3 is rapidly nearing completion in Shanghai, it is worth noting that vehicles built in Fremont, California, are being sold in China in numbers that donÂ’t make Musk unhappy.

Lewis Hamilton takes pole position at German GP as Ferrari falters

HOCKENHEIM, Germany — Lewis Hamilton took pole position for the German Grand Prix on Saturday, while Sebastian Vettel's miserable form continued for Ferrari as he was unable to even set a time and will start from the back. It got even worse for Ferrari as Vettel's teammate Charles Leclerc was unable to start the last part of qualifying, known as Q3, and is set to begin from 10th place on the grid on Sunday. "I don't know really how we did it today. I'm not quite sure what happened to the Ferraris," Hamilton said. "I think if Leclerc had done a lap at the end, it would have been close between us." Ferrari is winless in 10 races this season and that terrible run looks to continue, while Hamilton is aiming for a sixth win in seven. It was a record-extending 87th pole for the five-time world champion, who is 11 wins shy of Michael Schumacher's record of 91. Hamilton starts on the front row alongside Red Bull's Max Verstappen, who knocked Hamilton's Mercedes teammate Valtteri Bottas into third place. Red Bull's Pierre Gasly goes from fourth. "A bit disappointed with qualifying and I just struggled," said Bottas, who is level with Hamilton on four poles this season. "Ferrari (were) extremely quick and we knew it would be difficult to beat them ... We've been a bit lucky." Vettel, who crashed at last year's German GP despite leading from pole, looked visibly upset as he climbed out of his car in the team garage. The incident happened during the first part of qualifying, making him one of five drivers eliminated from Q1. The issue appeared to be related to a turbo problem, even more surprising given Ferrari had topped all three practice sessions heading into qualifying. Worried faces in the Ferrari garage turned to sheer horror as mechanics then detected a problem on Leclerc's car, ruling him out of the top-10 shootout in Q3. "Mine was a fuel system problem. It is a shame but we will be trying to understand what happened and not to reproduce it. The car felt great today so it's a shame it ended like this," Leclerc said. "I feel for the whole team. I will give absolutely everything to make everyone smile again tomorrow." Television footage showed a Ferrari fan in the stands sinking his face into his hands in disbelief. Mercedes head of motorsport Toto Wolff was sympathetic when commenting on Ferrari's latest setback. "It is a shame for Ferrari and for Sebastian at his home GP," Wolff told broadcaster Sky Sports, adding.

Maybach and Aston Martin alliance talks fall apart

If you have, like us, been salivating at the notion of a new generation of Maybach and Lagonda ultra-luxury crafts built by Aston Martin, we've got some bad news: According to reports emanating from Germany, talks between AML and Daimler have broken down.
The proposal under negotiation would have seen Daimler outsourcing production of the next family of Maybach models to Aston Martin, which in return would benefit from Mercedes-Benz platforms and engines - not only for its svelte GTs, but also for its own future Lagonda line of limousines and luxury SUVs. That, and a boatload of money - or at least that's what AML was reportedly seeking, an issue that served as the stumbling block over which the deal reportedly collapsed.
That's not to say the two parties couldn't still reach some sort of a compromise, but short of that, Daimler may opt to either shut down Maybach altogether, find another partner, or take another stab at building new models internally.