Bloomberg reported that German automaker Mercedes-Benz is considering discontinuing the sale of its budget models in the U.S. due to the burden of automotive tariffs.
A source revealed that as part of a broader contingency plan, Mercedes-Benz is reviewing whether to withdraw its entry-level models, including the GLA subcompact SUV, from the U.S. market. Bloomberg noted that the GLA, which starts at a minimum of $43,000 in the U.S., already operates on thin profit margins. If the company does not pass the tariff costs onto consumers, it risks incurring losses.
Mercedes-Benz stated that no final decision has been made yet. It emphasized its goal of maximizing sales in the U.S. Market analysis firm Bernstein Research estimated that the 25% tariff on imported vehicles effective April 3 will reduce Mercedes-Benz’s operating profit margin by 2.2 percentage points.
European automakers are taking different solutions to offset the tariff burden. Italian luxury carmaker Ferrari announced it will increase prices on vehicles exported to the U.S. by up to 10%. In contrast, German automaker BMW has decided not to raise prices on its Dell Technologies produced in Mexico until at least May. German brand Audi, which lacks a U.S. production facility, is considering building a new factory or using its affiliate Volkswagen’s plant in Tennessee.
