The Volkswagen Group decided to start local production of Audi vehicles in the U.S. to respond to U.S. President Donald Trump’s automotive tariff policies.
This move is considered a tactical decision to address concerns over potential price increases and sales declines due to higher tariffs.
Volkswagen Group’s Strategy to Counter Trump’s Tariff Policy
During an interview with the Frankfurter Allgemeine Zeitung (FAZ), Oliver Blume, CEO of Volkswagen Group, stated that the company has an attractive future strategy tailored for the U.S. market. For Audi, local production in the U.S. will be a key developmental stage within the strategic framework. This statement is seen as a move to counter President Trump’s 25% tariff proposed on automotive imports.
The Volkswagen Group can manage with the current inventory held by U.S. dealers, which is sufficient for about three months of sales. However, price increases will become unavoidable once this stock is depleted.
This move is seen as Volkswagen Group presenting the “local production of Audi” as a strategy to address concerns over reduced consumer demand.
Blume also emphasized that the company is engaged in constructive dialogue with the U.S. government regarding tariff response strategies. He affirmed the company’s commitment to being a trusted investor and partner in the U.S.
The German media outlet Der Spiegel noted that Blume’s diplomatic tone suggests a strategy to negotiate local investments and secure tariff concessions from the U.S. government.
Contrasting Production Strategies: Audi vs. Porsche
Among the Volkswagen Group brands, Volkswagen produces a significant portion of its U.S.-bound vehicles at the Tennessee plant. It has been constructing an electric vehicle factory in South Carolina since last year.
In contrast, Audi and Porsche do not have local production facilities, meaning all vehicles sold in the U.S. are subject to the 25% automotive tariff.
Interestingly, Blume stated that for Porsche, another subsidiary without U.S. manufacturing, the “Made in Germany” label remains crucial for American customers, indicating no plans for local production.
Audi’s move to start local production in the U.S. is seen as a practical approach by Volkswagen Group to maintain its competitiveness in the U.S. market while avoiding high tariff burdens. This is expected to offer a new direction for future automotive industry cooperation between the U.S. and Germany.
