European luxury car manufacturers, including Porsche and Aston Martin, are rapidly moving forward due to price increases in the United States. This could pave the way for larger brands to follow suit, as companies pass on the cost of tariffs to their own accounts, writes UNN with reference to Reuters.
Details
The United States and Europe have reached a trade agreement under which a 15% tariff will be imposed on cars manufactured in the EU starting in August, which is lower than previously threatened, but much higher than the 2.5% rate that was in place before US President Donald Trump began his trade offensive this year.
On Wednesday, Volkswagen's luxury brand Porsche said it had raised prices in the US by 2.3-3.6% in July, and currently has no plans to establish a manufacturing presence in the US – a move that would allow it to avoid tariffs.
This is not a storm that will pass / We continue to face significant challenges around the world
The Porsche CEO said this after the company lowered its annual profit target and reported tariff losses of $462 million in the first half of the year.
US tariffs have dealt a significant blow to global automakers, forcing companies like GM, Volkswagen, Hyundai, and Mercedes-Benz to record billions of dollars in losses, issue profit warnings, cut forecasts, and raise prices.
Ford Motor, which boasts domestic production of about 80% of the cars it sells in the US, said on Wednesday that its second-quarter results suffered $800 million in tariff losses, and higher US tariffs are likely to cost more than expected for the year.
Japanese automaker Nissan reported a quarterly loss of $535 million on Wednesday, affected by US tariffs, restructuring, and declining sales volumes.
British sports car manufacturer Aston Martin said it had gradually raised prices in the United States since last month, issuing a profit warning based on the impact of US tariffs and continued depressed demand in Asia.
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Additional costs
While large automakers have so far held back, other sectors are seeing price increases as companies try to pass on additional tariff costs. Analysts said large automakers could make similar moves in the second half of the year.
In the second half of the year, we aim to gain additional visibility on the ability of Mercedes-Benz and the rest of the premium original equipment manufacturers to raise prices in the US to offset the impact of tariffs.
European automakers are also becoming less optimistic about the possibility of additional industry tariff reductions, having resigned themselves to the 15% rate.
Mercedes CEO Ola Källenius told analysts on Wednesday that the group assumes tariffs will remain at 15%, which casts doubt on companies' hopes of being able to negotiate individual agreements.
Essentially, this is a global agreement for now
Any additional agreements were "very uncertain."
Last week, Volkswagen said it hoped that investment commitments would help it negotiate lower US tariffs.
Addition
Audi's after-tax profit in the first half of the year fell by 37.5% to 1.3 billion euros, its third consecutive annual decline. The company lowered its turnover forecast for the current year to 65-70 billion euros, expecting significantly lower sales profitability.