Dive Brief:
- U.S.
ports enjoy growth, thanks to an increase in partly assembled vehicles,
known in the trade as “knockdowns,” The Wall Street Journal
reported. - Partly
assembled cars pay much smaller tariffs than completed models, while
enabling manufacturers to gain entry in developing markets. - The
Trump administration’s decision to impose tariffs on
steel and aluminum could trigger reactions from European automakers.
Dive Insight:
Knockdown
kits are changing the U.S. automobile export market. Even though U.S. auto
exports are growing, knockdowns are outpacing them at many ports.
kits are changing the U.S. automobile export market. Even though U.S. auto
exports are growing, knockdowns are outpacing them at many ports.
The
Savannah and Brunswick, Georgia, ports, for example, have seen auto exports
rise 12% in the current fiscal year, while partly assembled cars — which are
completed in the destination country — have risen 56%.
Savannah and Brunswick, Georgia, ports, for example, have seen auto exports
rise 12% in the current fiscal year, while partly assembled cars — which are
completed in the destination country — have risen 56%.
While
the ports appreciate the business, they also have to make a logistics change,
because fully assembled cars can be driven directly onto specialized car
carrier ships, but the partially assembled cars are packed into containers and
loaded like other cargo.
the ports appreciate the business, they also have to make a logistics change,
because fully assembled cars can be driven directly onto specialized car
carrier ships, but the partially assembled cars are packed into containers and
loaded like other cargo.
Knockdown
kits are seen by many analysts as an entry point into emerging markets with an
undeveloped auto industry. Setting up final assembly operations is one way to
gain a foothold in new markets, which helps develop the supplier base and build
out manufacturing in those countries, Kristin Dziczek of the Center for
Automotive Research, told the Journal.
kits are seen by many analysts as an entry point into emerging markets with an
undeveloped auto industry. Setting up final assembly operations is one way to
gain a foothold in new markets, which helps develop the supplier base and build
out manufacturing in those countries, Kristin Dziczek of the Center for
Automotive Research, told the Journal.
The
growth also might be an indication that manufacturers are altering their
factory and overseas distribution strategies to adjust to growing threats of a
tariff war. Knockdowns are considered auto parts and are often subject to lower
tariffs than full cars. China recently said it would lower its tariff rate on
auto imports from 25% to 15%, while lowering the auto-parts rate to just 6%.
growth also might be an indication that manufacturers are altering their
factory and overseas distribution strategies to adjust to growing threats of a
tariff war. Knockdowns are considered auto parts and are often subject to lower
tariffs than full cars. China recently said it would lower its tariff rate on
auto imports from 25% to 15%, while lowering the auto-parts rate to just 6%.
It’s
also worth watching how non-U.S. automakers react, especially in the face of
the Trump administration’s Thursday announcement of tariffs on steel (25%) and
aluminum (10%) from Canada, Mexico and the European Union, as well as hints of
tariffs on imported vehicles. Japanese and German automakers, for example, have
invested billions of dollars in U.S. factories. BMW AG and Mercedes-Benz both
have large plants in the southern United States, and both export large volumes
of vehicles from the U.S.
also worth watching how non-U.S. automakers react, especially in the face of
the Trump administration’s Thursday announcement of tariffs on steel (25%) and
aluminum (10%) from Canada, Mexico and the European Union, as well as hints of
tariffs on imported vehicles. Japanese and German automakers, for example, have
invested billions of dollars in U.S. factories. BMW AG and Mercedes-Benz both
have large plants in the southern United States, and both export large volumes
of vehicles from the U.S.
SupplyChain Dive
