Wednesday, July 25, 2018

The Cost of an American Car in Germany

Few analysts sit down and lay out the cost factor of a US car, delivered into Germany.  So here is the rate.

The ship arrives and off comes Car-X (made in New Jersey).  The company makes this car, with profits figured in, and the shipping costs.....at $21,000.

As it comes off the vessel, there is a 10-percent import tax applied.  So that car goes to the German dealer at $23,100.  But the dealer now has to add in the VAT (the sales tax), which is set to 19-percent.  This brings the car up to $27,489.  The dealer needs to make his profit on this, so the cost will rise around 1,500, so the car is now around $29,000.

Figure the Euro exchange rate, and the car appears on the lot for 23,780 Euro. 

The import tax and the 19-percent sales tax?  Basically making an American car near 30-percent more.  Is that the only issue?  No.

Most American cars don't appeal to the European consumer.  The Jeep?  Yes.  The Mustang?  To some degree.  In an average year, I will see around two-hundred PT-Cruisers on the German highways.  But the look/appeal, along with gas mileage, and the cost-factor.....all weigh against the US car industry having some chance to market their cars.  That's the simple truth.

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