We live in an age of unprecedented everyday performance, safety and fuel economy in new cars, but that has come with a massive decline in the sports car market. In decades past you generally needed a dedicated sports car if you wanted something fun, or at least served as a status symbol. Today buyers go for the big 600 horsepower crossovers instead, not tiny convertibles. Now there’s even more bad news for sports cars and it comes in the form of President Donald Trump’s proposed tariffs.
As we’ve reported, the Trump administration wants a 20 percent unilateral tariff on all European automobile imports, ostensibly to spur American production and in response to the European Union’s own 10 percent tariff on U.S. auto imports. That would be a huge increase from the current 2.5 percent tariff on European auto imports, and 25 percent tariff on light-truck and van imports.
When you think about it, this would make all European imports face the Chicken Tax, which has kept Europe’s small trucks out of our market for decades. But while automakers may be able to survive with higher prices on SUVs, crossovers and maybe even sedans and small cars, it’s difficult to see a future where sports cars—already a troubled and struggling market here—can survive such tariffs.
After all, even BMW has said the sports car market is half what it was post-recession and may never recover, although it’s pushing ahead with a new Z4 regardless.
But with 20 percent tariffs on top of that? That doesn’t bode well.
This insight comes to us from Reuters, citing European execs rightfully concerned about the future of sporty Audis, BMWs, Mercedes-Benzes, Porsches, Jaguars and more in the U.S. if these tariffs are imposed—not to mention the additional costs imposed by Brexit:
“The tariffs, if they materialize, would call into question the business case for many niche models we currently sell in the United States,” a senior executive at one carmaker told Reuters on Friday. “Convertibles are a particular headache. With Brexit and U.S. tariffs, this market could shrink further.”
The executive said convertibles may not disappear if car makers can forge alliances to share production costs, or design vehicles that are less expensive to build alongside high-volume models.
The latter speaks to what BMW is doing with said Z4: partnering with Toyota to bring development costs down, yielding the new Supra as well. But it’s sad to think automakers may not be able to build sports cars anymore without complex, cost-saving alliances.
Also, this, if you want some numbers:
A tariff of up to 25 percent would destroy the business case for foreign carmakers to export to the United States models such as the $88,200 Mercedes SL roadster or Audi S5 Cabriolet - and deliver a 4.5-billion euro ($5.24 billion) hit for Germany’s premium manufacturers, analysts at Evercore ISI said.
Convertible sales already are dwindling in the United States, according to figures compiled by LMC Automotive. Sales fell from 177,000 in 2012 to 127,000 in 2017, and are expected to drop further to 113,000 by 2019, even without a tariff increase.
Mercedes is expected to sell about 20,000 convertibles this year in the United States and BMW fewer than 16,000, LMC projected. “We expect convertible sales would be hit quite hard” by higher import tariffs, said LMC Senior Vice President Jeff Schuster.
“Maybe the Chinese market will save the sports car!” you scream. No, it will not. The Chinese don’t buy those. Their roads suck, their traffic is horrible, their pollution is not conducive to top-down fun, and sports cars aren’t seen as status symbols like big SUVs and even sedans are.
As that story notes, it’s not worth it for the European automakers to shift sports car production to the U.S. either, since, again, it’s already such a tiny niche. They want to focus on volume here, the big-sellers, like all the BMW X SUVs built in South Carolina. Retooling plants for convertibles doesn’t make sense.
All these tariffs will do is make sports cars harder to justify in what was once their biggest market—it’s hard to remember now, but there was a time the SL in America was a pretty good cash cow for Mercedes. Now, thanks to tariffs on top of market trends, I suppose we can look forward to a future where the AMG GLE Coupe is the standard bearer instead.