Mercedes considers relocating some production to the US due to Trump’s 25% auto tariffs impacting profitability.

In Short

Mercedes-Benz is considering moving vehicle production to the US due to Trump’s 25% tariffs, which could affect the GLC model and others.

The tariffs are pressuring profit margins, prompting potential reductions in sales of lower-margin models like the GLA SUV.

Mercedes-Benz Group AG is contemplating relocating production of a vehicle model to the US due to Donald Trump’s 25% auto tariffs.

The production chief, Jörg Burzer, stated that this move may be essential to manage the financial impact of these duties but did not specify which model would be affected.

Tariff effect

Burzer mentioned that the company is still evaluating the effects of the tariffs, highlighting the importance of flexibility in their plans.

German automakers, including Mercedes, are significantly impacted by the US’s increased levies on auto imports. The demand for SUVs remains strong, while the transition to electric vehicles among US consumers is slower than anticipated.

The GLC, Mercedes’ most popular imported model, sold 64,163 units in the US last year, marking a 58% increase from the previous year. The GLC starts at just under $50,000 and has lower profit margins compared to higher-end models like the S-Class sedan and G-Wagon, making it more vulnerable to the effects of tariffs.

The newly implemented 25% tariff has caused turbulence within the auto industry, leading consumers to secure purchases quickly and resulting in a decline in shares amid concerns about rising costs. There are reports that Mercedes may reduce sales of lower-margin models, such as the GLA SUV, as the tariffs threaten to diminish profitability.