Tariff muddles US sales outlook for China-built Buick SUV Envision

GM's Buick Envision, the first China-made auto sold in the US, could fade from American highways if the Big Three automaker doesn't receive an exemption from a 25 percent US tariff.

While the crossover SUV Envision isn't one of Buick's top sellers stateside, it still accounted for 19 percent of all Buicks sold in the US in 2017, according to thedrive.com.

The Envision, first available in the US in 2016, is produced by Shanghai GM, a joint venture between GM and SAIC Motor Corp. The vehicle is assembled at a plant in Yantai in East China's Shandong province.

Although the Envision makes up about one-fifth of Buick's sales, its sales trail the larger Enclave and the smaller Encore.

"That's a vehicle that is a relatively low-volume vehicle in the US market," GM President Dan Ammann told reporters on Aug 3 in Detroit. "It's a high-volume vehicle in China, so in order to have that vehicle available in the US market, this (an exemption) is the only way that can work for us.

"The profitability we generate on that vehicle, selling it in the US market, we obviously reinvest it here," Ammann said.

"Global sourcing is what allowed that vehicle to be sold in the US. Volumes are too low to build the model in the US, and with the tariffs, it no longer would be cost effective to import it from China," David Zoia, executive director-content for WardsAuto, told China Daily on Thursday. "That's one or the dangers of protectionist measures. They take away some of the flexibility automakers have to maximize global capacity utilization and investment and (to) offer consumers a wider range of products."

In a July 30 filing with the US Trade Representative Office, GM said:

"While the volume of Envisions sold in the US is small, it is strategically important and essential to the Buick brand. A 25 percent tariff on the Envision may eliminate the vehicles from Buick's US offerings."

GM sold 210,000 Envisions in China last year, according to the filing. Sales of the SUV in China and in the US "both lead to significant repatriation of funds" to invest in US manufacturing and development of next-generation automotive technology, GM said in the filing.

China accounted for 83 percent of Buick's global sales in 2017, according to Automotive News.

Like many markets affected by tariffs, there also is a political aspect.

"It will continue to be the position of the UAW that products sold in the USA be made in the USA," Terry Dittes, the union's vice president and head of its GM department, said in a statement. "They can simply build these 41,000 Buicks right here in the USA and create American jobs!"

A former UAW president has called the Envision the "Invasion".

Ahead of the July 6 start date for the tariffs, GM shipped a six-month supply of Envisions to the US at the previous 2.5 percent tariff rate. Envision sales from April through June fell to 7,000, as inventories surpassed 13,000 at the end of June.

GM had cut prices by as much as $2,500 on the 2019 models, which it started shipping in late April, so Buick's 2,000 US dealers should have lower-priced Envisions to sell deep into the year.

"The previous price point (around $35,000) was too high" on the 2018 Envision, said Casey Clark, sales manager at Serra Buick GMC Cadillac in Washington, Michigan. "That put off some customers."

Contact the writer at williamhennelly@chinadailyusa.com.

Reuters contributed to this story.