Audi considers price hikes to offset US import tariffs, production costs

Volkswagen's premium Audi brand is weighing whether to pass on the cost of US import tariffs to customers through price increases, it said on Tuesday, adding it was expecting a decision this year on localising production in North America. 

Audi has no factories in the US and is one of the carmakers most exposed to import tariffs via its plant in San Jose Chiapa, Mexico, which makes the popular Q5 and employs more than 5,000 people. 

Its CEO Gernot Doellner, presenting full-year results for the brand, said the US was Audi's "main growth market" as part of the carmaker's strategy. 

"This is what we are pursuing. And we are pursuing this regardless of the changes in the political landscape in the USA," Doellner said, referring to import tariffs the US administration under President Donald Trump has launched on products from Mexico and Canada. 

Doellner said he expects a decision on localising production in the North American market, which could include using existing Volkswagen factories as well as a new site, this year. 

Trump earlier in March agreed to exempt automakers for a month from his punishing 25 per cent tariffs on Canada and Mexico so long as they complied with existing free trade rules. 

Audi's finance chief Juergen Rittersberger said the company was considering "the extent to which we will have to pass on at least some of the tariffs to our customers in the form of price increases". 

He said the goal was to find a "sweet spot" between price increases and production volume adjustments, something the group was now exploring in more detail in the coming weeks. 

The European Union is currently in talks with the US government to seek a solution on what Trump has called reciprocal tariffs, which could also lead to EU imports into the US being subject to additional duties. 

Rittersberger said he still hoped for an agreement between both sides. 

Expecting slight economic growth, the Audi Group, which also includes the Bentley, Lamborghini and Ducati brands, expects an operating margin of 7-9 per cent this year, up from 6 per cent in 2024. 

Audi on Monday unveiled up to 7,500 job cuts in a push to raise margins and lower costs, which brings total cuts planned by the Volkswagen group by the end of the decade to just below 48,000, or 7.8 per cent of its global workforce. 

Doellner said the restructuring was expected to lead to more than 1 billion euros ($1.1 billion) in savings over the medium term.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)