The 15% US import tariff agreed by Donald Trump and Ursula von der Leyen will significantly impact the financial performance and strategic decisions of Mercedes-Benz, Audi, and Porsche among German premium carmakers.
These brands are operating with tighter margins and have begun raising prices in the US, typically by 2-3%, to pass on some of the increased costs to consumers.
Exploring localized production
They are also exploring localized production options to mitigate future exposure. BMW, on the other hand, is coping best due to its US manufacturing and diversified exposure.
Mercedes-Benz reported a €370 million tariff impact in Q2 2025 alone, reducing its EBIT margin by approximately 1.5 percentage points. The company adjusted its full-year car segment margin forecast from 6-8% down to 4-6%, according to Reuters.
All made in Europe
Porsche exports nearly its entire US lineup from Europe—there is no local production. Audi, except for the Q5, made in Mexico, relies heavily on European manufacturing. Combined, the brands face a €1.3 billion loss in H1 2025, and their full-year guidance has been slashed due to the tariffs. Both are exploring a potential US assembly to mitigate exposure.
Oliver Blume, CEO of both Volkswagen Group and Porsche AG, depicted the business situation as being in a ‘sandwich’, squeezed between US tariffs and weak luxury car demand in China, where competition is fierce.
For Porsche, the company faced a €400 million tariff hit in H1 2025 and sharply revised its margin outlook to 5-7%, while preparing strategic cost reductions.
Meanwhile, the Volkswagen Group is absorbing significant tariff losses as well (roughly €1.3 billion in Q2 2025) and expects the 2025 automotive margin to shrink to 4-5%, down from its prior guidance of 5.5-6.5%.
Special tariffs for Volkswagen?
According to the Financial Times, Blume said earlier that the company is actively seeking special concessions from US authorities. He believes voluntary investment commitments—including large-scale production investment, job creation, and development of an Audi plant in the US could help VW negotiate reduced tariffs once a broader trade agreement is reached.
However, on the other hand, he acknowledged that significant automaker-specific exemptions are unlikely, as no formal auto-only deal has been negotiated yet.
Industry consensus is mixed in that regard. Only VW seems to be actively lobbying for it, while peers like BMW or Mercedes regard the standard US tax setup as the new norm.
BMW remains optimistic
BMW says its plant in Spartanburg (South Carolina) helps buffer much of this impact, as over half of BMW’s US vehicle sales are produced in the US. Still, the German carmaker anticipates a €1 billion hit to its 2025 earnings due to a combination of US tariffs (including 25% on Mexican-built cars), the steel & aluminium tariffs, and EU taxes on their Chinese-built EVs.
The company expects its automotive operating margin to decrease by about one percentage point, now estimated at 5-7%, compared to the consensus of 7.3%.
BMW already calculated the loss and remains confident and optimistic; nevertheless, as it maintained its full-year guidance on Thursday, holding strong against the threat of US tariffs.
