Audi May Take Drastic Action To Dodge Tariffs

Auto Blog

5 hours ago

German Media Fears Massive Costs
The ongoing uncertainty around how bad tariffs may get ahead of the July 9 deadline for agreement, for European automakers in particular, is no reason to stay idle. Regardless of what the final impact will be, tariffs aren't going anywhere anytime soon, and according to German magazine Der Spiegel, Audi is considering building a production facility somewhere in the southern U.S. to minimize the effects. But it's not an easy call to make. As noted by Automotive News, building a plant here would be 'the more expensive option out of a number of scenarios being considered, with company sources estimating costs of up to €4 billion (approximately $4.6 billion). So will it happen anyway? An Audi spokesperson has confirmed that the automaker intends to build its U.S. presence, but that's typical non-committal public relations speak.
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Audi Will Make A Decision This Year, Probably
Source:'We are currently examining various scenarios for this. We are confident that we will make a decision this year in consultation with the [Volkswagen] Group on how this will look in concrete terms,' the spokesperson wrote in an email. Audi has been rumored to be examining the viability of a U.S. plant for several years, but up until now, the automaker has been performing relatively well in America, although Audi's 2024 sales showed a sharp year-on-year decline of 14%, indicating that changes must be made somewhere, regardless of current or future tariff measures. To help effect that change, Audi is working on a fresh new design language, and U.S. manufacturing (or at least assembly) may help future arrivals find broader appeal with competitive pricing. BMW has been producing cars in South Carolina since 1994, and in those 30-odd years, it's grown to become the largest automotive exporter by value in the U.S. Perhaps Audi would benefit from a similar approach.
Where Audi Could Put Down Roots
As part of the Volkswagen Group, Audi wouldn't necessarily have to start from scratch. The VW brand operates a plant in Chattanooga, Tennessee, where the ID.4 EV and the Atlas and Atlas Cross Sport SUVs are produced, and its Scout Motors brand is building one in Columbia, South Carolina. But that's it – Porsche won't be moving production to America because its sales volumes would not justify such extensive investment, and its customer base is not unused to absorbing exorbitant price increases.
As we noted earlier, Audi hasn't made a decision yet because it's exploring other options. One of those reportedly is to negotiate a tariff import deal with the U.S. government, which compatriot automakers BMW, Mercedes-Benz, and VW are said to be collaboratively pursuing alongside the Ingolstadt-based manufacturer. BMW and Mercedes are the only exporters in this group, but all have made significant investments in the U.S.
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Sebastian Cenizo View Profile