The landscape for German luxury automobile manufacturers in the United States shifts quickly after a sudden and comprehensive announcement of the car tariff. On April 2, US President Donald Trump declared a tariff of 25% on imported cars and sent waves in the global auto industry. While BMW has so far managed to control these challenges with a combination of strategic price adjustments and temporary protection for a specific production in Mexico, Audi is in a completely different position-which led to a dramatic decision to set us vehicle deliveries indefinitely. A US spokesman supposedly confirmed this Automobile messages.
Audi hits break
Audi based in Ingolstadt, which imports its entire US vehicle line-up, was preserved a particularly hard hand. In contrast to BMW and Mercedes-Benz, Audi has no US manufacturing presence. While some of its most popular models such as the Q5 are built in Mexico, most vehicles come from Europe – Germany, Hungary and Slovakia. In addition to the existing 2.5%, the introduction of the 25% tariff made these imports significantly more expensive, so that Audi does not remain competitive in a significant luxury segments.
In response to this, Audi has hired all the deliveries of vehicles that arrived in the USA after April 2. A company sent to retailers, which was later confirmed by Audi officers, instructed dealers to concentrate on the sale of existing shares -over 37,000 vehicles -while the company re -evaluates its strategy. This inventory, which is expected to take about two months, will be the lifeline of the brand at short notice. In addition, Audi’s Future is very unsure on the US market without a solution for the tariff dispute.
BMWS balancing act
In contrast, BMW has managed to let its cars roll into exhibition rooms, but not without adjustments. BMW has long rely on its production facilities in Spartanburg, South Carolina, the world’s largest BMW plant, to strengthen its US presence. Spartanburg produced SUVS and the X3, X4, X5, X6, X7 and XM-Making a significant part of BMW’s US sales and are (for now) protected against the main load of the new tariffs. This offers BMW a critical advantage: these American vehicles are not subject to the same import fees as those from Europe or Mexico. As a result, BMW can maintain relatively stable prices for these popular models and help to satisfy dealers and customers.
However, the entire BMW line -up does not come from Spartanburg. All limousines and coupes, including the 2 Series, the 3 Series, the 4 Series, the 5 and the 7, are still imported, including the electrical variants. So far, BMW has only announced a price increase for the 2 Series Coupé and M2 Coupé to around 4 percent. The details of the full price increase remain under closure. BMW’s approach seems to be a strategic balancing act: losses in some costs for maintaining competitive prices for core models and still part of the tariff load to customers for others.
The Turbu Turbu Tariff not only plays Audi against its German competitors. It is a challenge for the entire luxury market in the US Mercedes-Benz, another German giant with the US production, uses its American SUVs to survive the storm. But the broader effects also remain discouraging for these manufacturers. The car manufacturers are now exposed to higher prices for imported parts and vehicles, a complication that reduces the total sales volume, which undermines profit margins and possibly approach the US market for the US market in the long run.
When it comes to BMW, we will expect more about the next few weeks about the company’s strategy in the United States. Discussions discussed in Woodcliff Lake took place last week, but the result of these conversations is currently unknown.
[Source: Reuters]
