Porsche, Aston Martin hike US prices as hopes for tariff sweeteners fade

Business Recorder

2 days ago

BERLIN: European luxury carmakers including Porsche and Aston Martin have surged ahead with US price hikes, which could point the way for bigger brands to follow in their wake as companies pass on the cost of tariffs.
The United States and Europe reached a trade deal that will see EU-made cars hit with a 15% tariff from August, lower than once threatened but far higher than the 2.5% rate before US President Donald Trump launched his trade offensive this year.
On Wednesday, Volkswagen's luxury brand Porsche said it had raised U.S. prices by between 2.3% and 3.6% in July, with no plans for now to establish a U.S. production presence - a move that would let it avoid the levies.
'This is not a storm that will pass,' Porsche CEO Oliver Blume said after the company cut its full-year profit target and flagged a $462 million hit from tariffs in the first half. 'We continue to face significant challenges around the world.'
U.S. tariffs have pummelled global automakers, forcing companies such as GM, Volkswagen, Hyundai and Mercedes-Benz to book billions of dollars of losses, issue profit warnings, slash forecasts and raise prices.
Ford Motor , which boasts domestic production for around 80% of the vehicles it sells in the U.S., said on Wednesday that second-quarter results took an $800 million hit from tariffs and higher U.S. levies would likely cost more than expected for the year.
Japanese carmaker Nissan reported a $535 million quarterly loss on Wednesday, impacted by U.S. tariffs, restructuring and lower sales volumes.
British sports-car maker Aston Martin said it had made incremental price increases in the United States since last month, issuing a profit warning based on the U.S. tariffs impact and prolonged suppressed Asian demand.
Additional costs
While bigger carmakers have so far held off, other sectors have seen price hikes as companies have looked to pass on the additional cost of tariffs.
Analysts said larger carmakers could take similar steps in the second half of the year.
'Into H2, we are looking to gain additional visibility with regards to the ability of Mercedes-Benz and the rest of the premium OEMs to increase prices in the U.S. in order to offset the impact of tariffs,' J.P. Morgan said in a note.
European carmakers are also getting less optimistic that they could seal extra sector-specific tariff reductions, resigned to dealing with the 15% rate.
Mercedes CEO Ola Kaellenius told analysts on Wednesday that the group was assuming tariffs would remain at 15%, throwing cold water on hopes companies may be able to negotiate individual deals.
'For all intents and purposes, that global deal for now is it,' said Kaellenius, also president of Europe's car lobby ACEA. Any side deals were 'very uncertain'.
Volkswagen had said last week it was hoping investment commitments could help it negotiate lower US tariffs.
But Porsche CEO Blume, also head of VW, suggested there would not be a separate U.S. deal for the automotive sector.
'I agree with Ola Kaellenius' assessment that there will not be a separate automotive deal,' Blume said.