Volkswagen is in advanced negotiations with the U.S. government to finalize an agreement for massive investments in the United States. The goal: to mitigate the impact of tariffs on vehicles imported from Europe and to strengthen local production in the world's second-largest automotive market.
Tariffs costing VW Group billions
During the IAA auto show in Munich, Volkswagen CEO Oliver Blume denounced an "asymmetrical" trade agreement between the European Union and Washington. European car imports to the United States are hit with tariffs of up to 27.5%. In contrast, American industrial products enter Europe freely, without customs duties.
According to Oliver Blume, these measures have already cost Volkswagen several billion euros since the beginning of the year, particularly for the Audi and Porsche brands, which do not have assembly plants in the United States.
A massive investment plan for local production
To counter this situation, Volkswagen is considering significant investments in North America:
- • Potential construction of a new Audi plant in the U.S.
- • Strengthening local supply chains to reduce dependence on imports.
- • Creating new jobs to gain the support of American authorities.
Volkswagen hopes to obtain financial or tax support from Washington to facilitate this expansion.
It’s five to midnight for Audi and Porsche
Oliver Blume indicated that the group must make decisions quickly. The executive acknowledges that Porsche is particularly affected, finding itself “sandwiched” between high U.S. tariffs and weakness in the Chinese market.
Awaiting a tariff reduction
Like its competitors, Volkswagen is awaiting the implementation of the import tariff reduction to 15 percent, a measure promised by the Trump administration. Such a reduction would help alleviate the financial pressure on European manufacturers and accelerate their investments.
Governance: Blume under pressure
Oliver Blume, who currently holds the dual roles of CEO for both Volkswagen and Porsche, confirmed that him holding down the two positions was not a long-term solution. However, the group has not yet decided which position he will retain, a subject that has drawn criticism from shareholders and unions.
An offensive strategy in the North American market
For Volkswagen, the objective is clear, it needs to strengthen its presence in the U.S. to protect its margins and accelerate the electrification of its lineup in North America. By producing more domestically, the manufacturer aims to bypass tariff barriers and better compete against its rivals like Tesla, GM and Ford.