The choice of Donald Trump The US presidency has not been liked in China, but neither in the Volkswagen Group, Mercedes o BMW. One of the key measures of his electoral program consists of increasing tariffs on imports. Also to the import of cars from Europe.
The future president wants raise customs duties from 10% to 20% in all products that enter the United States, come from Europe, Mexico or Canada (and even 60% to 100% for Chinese products). And that will mean the loss of billions of euros in the coffers of German manufacturers.
All manufacturers will suffer, but Volkswagen will be the one that suffers the most
The reelection of Donald Trump as president of the United States could significantly reduce the profits of the Volkswagen Group, BMW and Mercedes-Benz. “There is a high risk that additional tariffs will be imposed in the US in the future,” Daniel Schwarz, an analyst at investment bank Stifel Europe, told Handelsblatt. “We are talking about ten percent of operating profits that would be at risk.”
German car manufacturers Every year, about 583,000 European-produced cars and 343,000 cars from Mexico are exported to the United States.according to data from Marklines, a market research company specialized in the automobile industry, to which Handelsblatt has had access.
The majority of these almost million cars are high-end cars with high prices and margins, a sharp increase in the tax from the current 2.5% to a figure around 12.5% could be devastating. According to Stifel Europe calculations, German brands could suffer a drop in profits of between 11% and 15%.
BMW and Mercedes have factories in the United States, in South Carolina and Alabama, respectively, which not only supply the American market, but also Europe. Although some models cannot be manufactured in the United States, the production of many others could be done in the United States, if they wish to continue selling those models on the other side of the Atlantic.
Of the three large German manufacturers, the one that would suffer the most in this case would be the Volkswagen Group. All Porsches sold in the US come from Europe, and the Audi’s best-selling model in the US is the Q5 made in Mexicowhich represents a third of the brand’s sales.
And if Trump has it in for Germany, it is nothing compared to the mania he has for Mexico. Thus, he has come to suggest a 200% tariff on cars manufactured in Mexico and exported to the United States. BMW and the Volkswagen Group also manufacture cars in Mexico, as do Toyota, General Motors y Fordbut unlike those brands, Audi and Porsche do not have a plant on US soil.
Curiously, Volkswagen does have a factory, in Chattanooga, Tennessee. And given its low utilization (175,000 cars manufactured in 2023 in a plant with capacity for more than 500,000 cars per year), it would not be unreasonable for the Audi Q5 to be manufactured if necessary.
As Handelsblatt points out, this uncertainty coming from the United States could not come at a worse time. For years, the United States and China have been the largest export markets for Volkswagen Group vehicles, and with sales in China in decline, a restructuring in Europe with the threat of closing several factories in Germany, the last thing it needs is a trade war with the United States. Which would affect the entire German economy, and therefore the entire European economy.
According to Joachim Nagel, President of the Bundesbank (German Central Bank), increasing tariffs on European imports “would significantly harm Germany.” And he warned in an interview with the German weekly Die Zeit that “if the tariff plans were applied, it could well cost us 1% of Germany’s economic results.”
Source: www.motorpasion.com
