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08 July 2017

Axles of Evil: The Truth About German Automakers and America – The Big Picture

No Obligation, Fast & Simple Free New Car Quote

“The Germans are bad, very bad. See the millions of cars they are selling in the U.S.? Terrible. We will stop this.” It was a typical tweet-friendly Donald Trump soundbite, made—according to Germany’s Der Spiegel and later confirmed as correct by White House economic adviser Gary Cohn—during a meeting with senior European Union officials.

Trump’s remarks were initially interpreted as an attack on the German people. But that was collateral damage: His real target, apparently, was Germany’s massive trade surplus with the U.S. “He didn’t say the Germans are behaving badly,” European Commission president Jean-Claude Juncker said in Sicily before the G7 Summit, reported The Washington Post. “He said we have a problem, as others do, with the German surplus.”

German auto industry execs could be forgiven for rolling their eyes at the protectionist rhetoric coming from the leader of a country that has long lectured the rest of the world about the benefits of free-market capitalism. After all, no one is forcing Americans to buy all those Benzes, BMWs, VWs, and Audis.

The President’s implication that the German auto industry is somehow resorting to unfair trade tactics to win sales in the United States is also likely to cause puzzled grimaces in Stuttgart, Munich, and Wolfsburg. Unlike Japan or China—also targets of Trumpian tirades on trade—Germany cannot manipulate its currency because it shares the euro with other EU nations. And its highly skilled and heavily unionized home-country workforce is by U.S. standards a high-cost place to manufacture automobiles. Even a cursory glance at our buyer’s guide reveals German-brand vehicles are among the most expensive sold in the U.S. Dumping? Nope. It simply doesn’t add up.

Spartanburg, South Carolina, is home to the largest BMW assembly plant in the world.

To put things into perspective: Of the 17.5 million vehicles sold in the United States last year, about 1.38 million, or less than 8 percent, were German or from German-owned brands. That hardly seems an existential threat to the U.S. economy.

What’s perhaps more important is that many of those “German” vehicles sold in America are actually assembled here. German automakers actively contribute to the U.S. economy, having invested in plants that employ more than 15,000 U.S. citizens in Spartanburg, South Carolina; Vance, Alabama; and Chattanooga, Tennessee—embracing Red State regions that hitherto offered few high-level manufacturing jobs. Those plants last year produced almost 850,000 vehicles, and not just for the U.S. market—in 2016, 75 percent of the BMW X3, X4, X5, and X6s built in South Carolina and 59 percent of the Mercedes-Benz GL and GLEs made in Alabama were exported. Spartanburg also is BMW’s largest assembly plant in the world.

Not for the first time in his tumultuous presidency, Trump has shot from the lip and missed. If he truly believes Germany is selling too many cars in America, to the detriment of American automakers and American jobs, the problem isn’t Germany’s. It’s Detroit’s.

Those Americans who buy a German car or truck rather than one from Detroit do so because they believe it better delivers the performance, style, and functionality they want or need at a price they can afford. It is not for any politician, even the President of the United States, to dictate consumers should do otherwise. It’s up to the designers, engineers, and marketers at GM, Ford, and FCA to use their talents to create products that compete with those from Daimler, BMW, and Volkswagen Group.

Build a better product, and let consumers exercise their freedom of choice. That’s always been the American way.

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