Manufacturing experts might have a problem with this method of operation: Assemble vehicles in Germany. Disassemble them. Ship the works to the U.S. Reassemble them and deliver to dealers.
But tax experts say that's how to get around a U.S. tariff dubbed “the chicken tax,” so named because it stems from a 43-year-old international dispute involving frozen fowl. The tariff slaps a 25% surcharge on assembled commercial trucks imported into the U.S.
It doesn't apply to assembled-unassembled-reassembled trucks if a manufacturer is willing to go through the bother.
DaimlerChrysler AG is willing to do it with its popular Sprinter van, badged as Dodges and Freightliners in the U.S. where dealers can't get enough of the versatile mid-duty truck.
DC introduces a redesigned '07 Sprinter, touting it as a vehicle that breaks the mold on current domestic van offerings. The new one is wider and taller.
On the surface, it may seem impractical to assemble Sprinters in Dusseldorf; disjoin the engine, transmission, axle and wheels; and send them as separate units to a factory in Ladson, SC, where the trucks are put back together again.
“But it works, and it gets around the chicken tax,” says Mark Freymueller, Sprinter's brand manager. “A 25% tariff added to the cost of a vehicle puts it at a real price disadvantage.”
Critics of the tariff — including the American International Auto Dealers Assn., which has long lobbied against it — call it a ludicrous holdover from 1964 when the U.S. applied the levy on imported trucks in retaliation for European countries putting tariffs on U.S. frozen chicken meat exports.
The Sprinter was introduced in Europe as a Mercedes-Benz model in 1995. The van has been sold for four years in the U.S., which has become the second-largest market with sales increasing 10-fold, to 21,961 deliveries in 2006.
UPS and Federal Express are big customers. About 400 Dodge dealers with truck centers sell the Sprinter.
Prices range from $30,950 to about $45,000 for a well-equipped topline model, says Freymuller.