Europe’s largest auto manufacturer, Volkswagen, is vulnerable to the increase in US tariffs.(Joan Cros/NurPhoto via Getty Images).
Volkswagen could relocate some production of its high-end Audi line to dodge US tariffs on automobiles ordered by President Donald Trump, the German carmaker’s CEO said in an interview released Friday.
Europe’s largest auto manufacturer, which is especially vulnerable to the increase in US tariffs, was in “constructive discussions” with the US administration on the issue, Oliver Blume told the Frankfurter Allgemeine Zeitung newspaper.
Volkswagen, which earlier in April said Trump’s slew of planned tariffs had dragged down its first-quarter operating profit, wanted to do “as much as possible to remain an investor and reliable partner for the United States”, Blume added.
“For Audi, production in the United States would be in line with our development strategy,” he said.
However he ruled out any American manufacturing for Porsche, despite the US market being the luxury sports car brand’s largest.
At only around 70 000 vehicles a year the volumes were too small to consider the idea, he said.
READ | Trump is looking into whether he can remove US Fed chair Jerome Powell
Trump last month announced a 25% tariff on autos imported to the United States, which is the number one destination for German car exports.
The Republican has claimed that imposing tariffs would make foreign companies relocate part of their production to the United States.
Volkswagen – a 10-brand group which also includes Audi, Porsche, Seat and Skoda – sold just over one million vehicles in North America last year, 12% of its sales by volume.
With Volkswagen sales in reverse in China in the face of stiff competition from domestic carmakers, particularly on electric vehicles, the US market has become even more important for the German manufacturer.
Despite the presence of a Volkswagen production plant in Tennessee, 65% of its flagship VW brand’s American sales come from vehicles shipped into the United States from Europe or Mexico.
The figure rises to 100% for its high-end Audi and Porsche brands.
Blume would not comment on the tariffs’ financial impact on Volkswagen, nor on whether it would raise its prices in the United States in response.
