Automobile

Mini to dealers: Chinese tariff on EV makes 3% margin cut necessary

“If I have 10 cars that I am going to make $3,000 on selling, and I have 10 cars that have a very low margin and that customers aren’t completely sold on, why am I going to work harder to make less money?” one dealer said.

Peyton underscored that discussions with the Mini National Dealer Council about a margin reduction are preliminary. Other options being considered include adjustments to the dealer bonus structure.

Meanwhile, Mini is rethinking conventional retail strategies to help sell the China-made vehicles profitably in the U.S. “We’ve got to be realistic about … how could we bring the products,” Peyton said.

One option: keeping a central stock of vehicles and delivering customer-ordered vehicles to stores, rather than retailers ordering and carrying inventory on their floorplan. The longer a product sits on a lot, the more factory incentive support it requires, Peyton said.

“That becomes less and less likely when almost everything is getting eaten up by the tariff situation,” he said.

To skirt tariffs, Mini seeks to diversify EV production beyond China. A battery-powered version of the Countryman crossover will be built in Leipzig, Germany.

“There’s already some potential to do something other than China,” Peyton said.

Even though BMW operates a crossover assembly plant in Greer, S.C., Peyton ruled out EV production in the U.S. for the foreseeable future, citing the absence of a supplier base.

“Even if you were to say, ‘I’m going to ship all the parts in and build in [South Carolina],’ it’s the same difference because I get a tariff on all those imported parts,” he said.

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