Automaker Audi, a subsidiary of Volkswagen AG, warned that U.S. President Donald Trump’s initiative to raise tariffs on European cars could negatively impact its financial performance this year. The company confirmed its annual forecast on Tuesday, but has not yet factored in either the impact of the escalating situation in Iran or the prospect of higher U.S. import duties.
According to Chief Financial Officer Jürgen Rittersberger, the tariff risk “is, of course, still very fresh” and “not yet confirmed at the moment,” but it “would be a significant burden for our operations.” Audi is still assessing the potential impact. Trump’s plan involves increasing duties on European cars to 25% from the current 15%, creating new uncertainty among German automakers. According to Bloomberg Intelligence analysis, if U.S. tariffs rise by 10 percentage points, Audi would face additional costs of 444 million euros (equivalent to $519 million). Currently, Audi produces models for the U.S. market in Europe and Mexico.
Market Strategy and Challenges
Meanwhile, Audi is facing declining sales in China, which previously drove the company’s growth and profit. CEO Gernot Döllner is working to develop a turnaround plan for Audi, which includes launching a new electric vehicle brand in China. The company is also seeking additional ways to cut costs, including by reducing the complexity of its product range, Rittersberger noted. Audi has already reduced production capacity at its German plants and is implementing plans to cut thousands of jobs.
To boost its competitiveness in the U.S. market, Audi will introduce the Q9 this year — its largest SUV. The model, which will be produced in Slovakia, aims to capture market share from rivals like the Mercedes GLS and Cadillac Escalade. However, the Q9 would also be subject to higher U.S. tariffs if they are implemented.
Source: Bloomberg Markets
