Audi Weighs Price Increases in Response to Potential U.S. Tariffs
Audi, the German automaker, is warning consumers about the potential for price increases at dealerships due to looming U.S. import tariffs. According to a Reuters report, the company revealed during its full-year results presentation on March 18 that it is evaluating whether to pass on these costs by raising prices on new cars.
Audi’s Chief Financial Officer, Juergen Rittersberger, stated that the company is seeking a “sweet spot” between adjusting car production and increasing prices. He explained that Audi is exploring “the extent to which we will have to pass on at least some of the tariffs to our customers in the form of price increases.”
Currently, Audi’s lone North American factory is located in San Jose Chiapa, Mexico, where the Q5 is produced. This puts the automaker in a somewhat precarious position.
Audi CEO Gernot Doellner emphasized that the U.S. is Audi’s “main growth market,” and that the company will work around potential obstacles to expand its presence in the country. The proposed 25% tariffs, set to go into effect on April 2, target imported vehicles. Automakers have been granted a one-month tariff carveout for USMCA-compliant vehicles, which require 75% of their parts to be made in North America.
Doellner stated, “This is what we are pursuing. And we are pursuing this regardless of the changes in the political landscape in the USA,” adding that existing Volkswagen factories or a new facility could take in some Audi production. The company announced that they are awaiting a decision on whether to move more production to North America.
Audi’s financial burden is further compounded by the fact that many of its best-selling models may be subject to these tariffs. The Q5 crossover, Audi’s best-selling car, is produced in the San Jose Chiapa factory. In 2024, 56,799 Q5s were sold in the U.S., accounting for over a quarter of the four rings’ sales in the region.
Luxury Automakers Face Tariff Pressure
Audi isn’t the only luxury automaker raising concerns. On February 20, Mercedes-Benz CFO Harald Wilhelm warned that increased tariffs in the U.S. could lead to a 1% margin loss, potentially equating to a loss of a billion euros.
To circumvent possible tariffs and the “dynamic geopolitical environment,” Mercedes plans to increase its “local-for-local” production, in markets like China and the United States, where models sold in those markets are manufactured within the respective countries. Mercedes aims to boost localized production from 60% to 70% by 2027, with a “core” Mercedes car being manufactured at its Tuscaloosa, Alabama factory.
