Another luxury car maker is taken down by US tariffs
Consumer sentiment has fallen, but a sale is a sale, and people are taking advantage.
"People are buying cars because they think tariffs are coming," one Mazda dealer said.
Related: Investment bank says tariffs are devastating these businesses
U.S. companies like Ford are in an especially advantageous position because they (usually) import fewer vehicles than their foreign competitors.
Nearly half of American drivers cite car expenses as the reason they can't save any money, and the average American spends about 20% of their monthly income on auto loans, fuel, insurance, and maintenance.
Most financial experts cap the monthly income you should spend on a vehicle at 15%.
But according to a MarketWatch Guides survey, about 10% of drivers say they spend 30% of their monthly income on driving, while another 12% said they "found themselves living paycheck to paycheck due to the financial strain of their cars."
Image source:On Monday, Mercedes-Benz said that in the second quarter, unit sales of cars and vans fell 9%, primarily due to tariffs.
The luxury German brand delivered 547,100 cars and fans between April and June. Mercedes' Cars unit reported a 9% decline to 453,700 vehicles sold as support in the U.S and China both dried up.
North America deliveries fell 14%, while China deliveries declined 19%.
"Deliveries to dealerships were carefully calibrated to navigate new global tariff policies, impacting sales of Mercedes-Benz Cars in the U.S. and China in particular," Mercedes said.
Related: Toyota makes a tariff move customers are going to hate
European sales were up 1%, while sales in Germany rose 7%.
Perhaps most concerning was the 18% drop in battery electric sales to 41,900 vehicles.
According to a Bernstein note last week viewed by Reuters, Mercedes expects tariffs to play a big part in its performance this quarter.
More automotive news:
Detroit Big 3 benefit from auto tariffs now, but time is running outPopular Ford newcomer overtakes Jeep in a key areaToyota makes surprising move to beat Tesla in key market
Mercedes expects tariffs to shave less than 3% from its second-quarter profit margin. The company seemed relieved about a number that would have been worse without "some de-escalation of tensions between the U.S. and China, some tariff offsets, and timing because tariffs were only ramping up in April."
U.S. tariffs forced Mercedes-Benz, and many other automakers both foreign and domestic, to pull their guidance for the year due to lack of visibility.
This is a smart move, given President Trump's mercurial decision-making on tariffs. The current pause on non-automotive tariffs is set to end on Wednesday, July 9, but the 25% auto tariffs that have been in place since March never went away.
Mercedes operates two manufacturing plants in the U.S., one in Tuscaloosa and the other in Vance, Alabama. The plants produce four of its most popular models, the GLS and GLE SUVs, the GLE Coupe, and the new C-Class.
The Tuscaloosa plant was Mercedes' first plant outside of Germany when it was completed in 1995.
Today, the 1,000-acre site has over 5 million square feet of manufacturing space, and its facilities employ more than 11,000 Alabamians.
Mercedes sold 324,500 passenger cars and 49,600 vans in the U.S. last year, representing 16.4% and 12.2% of sales, respectively.
Related: Car buyers should shop these brands for the best tariff deal
The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Car and Driver
19 minutes ago
- Car and Driver
This 1967 Ford Mustang on Bring a Trailer Is Also an Italian Exotic
Everyone's familiar with the '67 Mustang, but not this one. This is an authentic Zagato design. As a former Mille Miglia entrant, it's eligible to run the Mille again in the future. Presumably, you've heard of the term Spaghetti Western. Well, here's what that genre might look like in car form: a traditional American hero, but done up by an Italian auteur. This 1967 Mustang GT fastback is a one-of-one Elaborazione Zagato, with styling tweaks from one of Italy's best-known coachbuilders, and it's up for sale on Bring a Trailer (which, like Car and Driver, is part of Hearst Autos). The design may not be to everyone's taste, but the provenance means it should fetch a fistful of dollars. Bring a Trailer This car left the Ford assembly line in the spring of 1967 and was shipped to Italy along with a Shelby GT350. Originally white, and fitted with a 289-cubic-inch V-8 and a four-speed manual, it was repainted green and fitted with custom bodywork that gave it a very Peugeot-like front end. Bring a Trailer From the rear three-quarter, this car is still very much a Mustang. From the front, only the galloping horse badge gives a clue to those thrown off by the square headlights and hood scoop. It's certainly not going to appeal to everyone, but the fact that this is the only one ever made gives it impeccable rarity. Bring a Trailer Originally driven into the early 1980s by its first owner, this Mustang Zagato was put into storage for a little over a decade before being restored. During the restoration, the decision was made to repaint the car to its original white; however, this was reversed with a 2019 repaint. At this point, the car was certified by Zagato, giving it further authenticity. So verified, the car was invited to participate in the 2021 Mille Miglia. This adds quite a level of appeal, as having once been invited to participate, it's eligible for future events. Getting into the Mille is a bit tricky, and this Mustang Zagato might be just the ticket. Bring a Trailer Best of all, while the unusual bodywork is a one-off, this is still a V-8 Mustang underneath. You get a four-barrel-fed 289 V-8 with plenty of torque, plenty of mechanical spare parts out there to keep it running, and a comfortable 2+2 cabin. The overall condition of the car is tidy, but it's not a museum piece you can't drive. Part of the fun here is the "I never heard of it" effect you'd get when rolling up to a show in this car. Everyone's seen a 1967 Mustang GT fastback before, but this car's sure to draw comments. The auction ends on July 17. Brendan McAleer Contributing Editor Brendan McAleer is a freelance writer and photographer based in North Vancouver, B.C., Canada. He grew up splitting his knuckles on British automobiles, came of age in the golden era of Japanese sport-compact performance, and began writing about cars and people in 2008. His particular interest is the intersection between humanity and machinery, whether it is the racing career of Walter Cronkite or Japanese animator Hayao Miyazaki's half-century obsession with the Citroën 2CV. He has taught both of his young daughters how to shift a manual transmission and is grateful for the excuse they provide to be perpetually buying Hot Wheels. Read full bio
CNBC
42 minutes ago
- CNBC
These college majors have the best job prospects — and they aren't what students expect
For many students, majoring in finance is a proven pathway to a well-paying career and job security. In fact, U.S. graduates believe that finance offers the best career prospects overall, considering today's economic climate, according to a new survey by the CFA Institute, a non-profit focused on financial education. The group polled more than 9,000 current college students and recent graduates between the ages of 18 and 25. While confidence about career prospects in finance increased over the past year, confidence decreased in other areas including STEM and healthcare, the CFA Institute also found. However, finance ranks well behind many other majors when it comes to employment opportunities after college, other data shows. More from Personal Finance:Trump aims to slash Pell GrantsStudent loan borrowers face 'default cliff', report findsWhat the endowment tax in Trump's megabill may mean for college "For me, a career in finance represents a pivot to stability," said Rafael Perez, 29, who is pursuing a Master of Science degree in finance at California State University in Sacramento. "I've been a creative my entire life, so discovering my affinity for finance was a relief in a sense." Perez says he still experiences some pushback from his peers. "When I tell people I'm getting an MS in finance, they often jokingly call me a 'finance bro,'" he said. "Despite the negative connotations of the phrase, it also reflects an expectation of financial success and prestige." Students and their families are paying more attention to which college majors are most likely to pay off, and are putting greater emphasis on a degree's return on investment, according to Peter Watkins, CFA Institute's senior director of university programs. "There's an awareness from students that they have to make sure the degrees will make them work-ready," he said. As young adults enter the real world, they are facing an increasingly tight labor market. According to a recent analysis of labor market conditions for recent college graduates by the Federal Reserve Bank of New York, job opportunities "deteriorated noticeably in the first quarter of 2025." Among this group, the unemployment rate jumped to 5.8% — the highest reading since 2021. Although finance majors had higher salaries compared to most other majors, grads with nutrition, art history and philosophy degrees all outperformed both finance and STEM fields when it comes to employment prospects, the New York Fed found. For finance and computer science, the unemployment rate in those fields was 3.7% and 6.1%, respectively. By comparison, the unemployment rate for art history majors was 3%, and for nutritional sciences, the unemployment rate was just 0.4%, the New York Fed found. After notching significant gains since 2020, the rise of computer science majors came to a near standstill this year, other reports show, fueled by concerns that artificial intelligence is rapidly taking over jobs in the field. Economics majors also fared worse than majors such as theology and philosophy when it came to the employment rates for recent college graduates, according to the New York Fed. Philosophy majors have an unemployment rate of 3.2%, for example, and for economics, it's 4.9%. The New York Fed's report was based on Census data from 2023 and unemployment rates of recent college graduates. The disconnect between the New York Fed's outcomes by major and the CFA survey findings — which is based on perceptions — is likely due in part to societal expectations, particularly from parents, Watkins said. "It may possibly be parental guidance, as in, 'go for business,'" he said. Meanwhile, demand for humanities majors is on the rise, and with good reason. At a conference last year, Robert Goldstein, the chief operating officer of BlackRock, the world's biggest money manager, said the firm was adjusting its hiring strategy for recent grads. "We have more and more conviction that we need people who majored in history, in English, and things that have nothing to do with finance or technology," Goldstein said. This demand for liberal arts degrees is fueled by the rise of artificial intelligence, which drives the need for creative thinking and so-called soft skills. "It's a bit of a gold rush in AI, people who are adopting quickly are going to succeed quickly," Watkins said.
Business Insider
an hour ago
- Business Insider
From rice to digital services, here is what's making trade negotiations difficult for the Trump administration
After giving 75 trading partners a three-month tariff pause and telling Time in an April interview that he "100%" has "made 200 deals," President Donald Trump came away with three trade deals, some tentative, as of mid-July. Months of negotiations with Japan, Korea, and Thailand have not yielded agreements. As Trump sends out a new round of tariff letters to over 20 countries, threatening some with tariffs as high as 50%, trade experts told Business Insider that many sticking points stand in the way of quick trade deals. Navin Girishankar, president of the Economic Security and Technology Department at the Center for Strategic and International Studies, told Business Insider that the Trump administration believes that unpredictability and ratcheting up tariffs give them leverage, but it remains questionable if that is effective. "I'm actually feeling that it's more and more the loss of leverage," said Girishankar. "Because the reason we're shifting timetables is because we're not able to get to the deals that we think are acceptable." Domestic politics throw a wrench in negotiations Multiple trading partners that Trump is negotiating with are dealing with elections and policies that are popular in their respective countries. Girishankar told BI that, for example, Korea has a draft of a digital platform bill that its legislators see as important to national security. But the issue is, Girishankar says, the bill would be considered a barrier to entry for US tech companies like Meta and Google if it passes. Trump has also been complaining on social media that Japan won't import rice from the US, while the US imports a large number of cars from the Asian country. Drew DeLong, lead in geopolitical dynamics practice at Kearney, a global strategy and management consulting firm, told BI that Japan has been under a lot of domestic pressure because it has an upper house election in late July. "Once that's finished," said DeLong, "It will be important to watch how PM Ishiba handles the Trump relationship with less domestic political pressure." Despite representing a relatively small part of the national GDP, the agriculture sector in Japan has cooperatives with significant lobbying power that have gained protectionist measures on staple crops like rice. "Agriculture has historically been a very challenging component of any trade agreement. Farmers are an important constituency in both countries," Girishankar added of the US and Japan. Ann Harrison, dean of the University of California, Berkeley's Haas School of Business, told BI that the Trump administration may have simply set itself up for "a herculean task." "Different countries have different sensitivities, like how it's the auto industry for Japan, and lumber and pharmaceuticals for Canada," said Harrison. "That's why any meaningful trade deals typically take three years and won't happen in such a short period of time." China complicates trade deals Though the tariff pause on China doesn't expire till mid-August, the manufacturing hub casts a long shadow. Harrison said the Trump administration needs to balance its need to reduce the trade deficit, without going so far that it would push Asian allies like Vietnam and the Philippines toward a closer alliance with China. "It's politically interesting that the US gave Vietnam and the Philippines some of the lower tariffs," said Harrison. "This is also becoming a militarily loaded decision as much as an economic one." In March, Defense Secretary Pete Hegseth met with Philippine President Ferdinand Marcos Jr. and said the two countries, which have been fighting "shoulder-to-shoulder" since World War II, will work toward "reestablishing military deterrence" in the Indo-Pacific region. DeLong also said that the transshipment issue — one country rerouting its goods through another country, potentially to evade higher tariffs — has also made a comeback in the agreement with Vietnam, mostly due to concerns that China would reroute shipments to the US through Southeast Asia. "Still unclear how this will work mechanically," said DeLong. "Higher RVC thresholds? Port of shipment tracking? Headquarters country of origin?" According to statistics from the General Administration of Customs in China, the total value of China's exports to Vietnam increased by at least 15% every month in 2025 compared to the same months in the previous year. Girishankar echoed the concerned that transshipment would be complicated to implement and define, though he understands what the administration is attempting to achieve.
