SANTA MONICA, CA – Manufacturing experts might have a problem with the following 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.
But 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 here, touting it as a vehicle that breaks the mold on current domestic van offerings.
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 Independent 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.
Sprinters can come over in one piece if they are built as passenger vans because the tariff only applies to commercial vehicles. But 90% of the Sprinters DC expects to sell in the U.S. are for commercial use.
UPS and Federal Express are main customers because the tall, upright configuration of the vehicles fits their uses, says Freymueller. The truck also is popular with florists, caterers, plumbers and an array of tradesmen and delivery people, he says. There are 25 different applications, from cargo van to chassis cab.
The former Daimler-Benz AG launched Sprinter 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.
The new-generation Sprinter is wider and taller and offers more cargo room than its predecessor.
New options include a 7-ft. (2.13-m) “mega-roof” for easy rear access, says Freymueller, who at 6 ft. 7 ins., jumps in the cargo section to demonstrate the clearance.
While the old Sprinter only offered a 2.8L I-5 diesel engine, the new vehicle has two engine selections: a 3L V-6 diesel with 154 hp and a 3.5L V-6gasoline version with 254 hp.
The diesel gets 20 mpg (11L/100 km), impressive for a Class 3 truck weighing up to 11,030 lbs. (4,804.6 kg).
The Sprinter also has interior amenities – such as a CD player and air conditioning – not usually associated with commercial trucks.
Standard equipment includes power windows and locks, integrated wide-angle mirrors and an electronic stability program that takes into account the vehicle’s payload, reducing the risk of skidding out of control.
It is a popular vehicle that practically sells itself, says Freymueller. “We haven’t marketed it at all. We want more in the U.S. to meet demand.”
About 400 Dodge dealers with truck centers sell the Sprinter.
Base model prices (including a $980 destination charge) are $30,950 for a chassis cab, $31,290 for the cargo van and $33,490 for the passenger van.
Top-of-the-line prices are $39,135 for a longer-version cargo van with a mega-roof and diesel engine; and $39,555 for a longer passenger van with a high roof and diesel engine.
Options range from skylights atop the mega-roof to an “Add-Light” system that provides extra lighting on winding roads.
“If you spend $45,000, you will have a really well-equipped vehicle,” Freymueller says.