German luxury cars dominate the US market — but falling sales and rising tariffs are shaking consumer confidence. Is this the beginning of the end for Germany's automotive success story in the US?

Berlin

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

German luxury car brands, including BMW, Mercedes, Volkswagen, and Audi, are experiencing significant pressure from U.S. tariffs on imported vehicles. Although the tariffs have recently been reduced from nearly 30 percent to 15 percent, carmakers warn that the additional costs will amount to billions of dollars, affecting their profitability and market strategy.

Dealers in the United States report declining sales and growing consumer uncertainty about future prices. While current inventory was imported before the tariffs took effect, price increases are already being implemented, and further rises are expected once existing stock is depleted. As new cars become more expensive, both dealers and consumers are turning to used vehicles, but German manufacturers may struggle to adapt to these changing market conditions.

U.S. tariffs pile pressure on German carmakers

German cars are number one in the U.S. when it comes to luxury. Many of them are manufactured in Europe or other countries and imported. Donald Trump wants to put a stop to that. Will tariffs spell the end of a German success story? This car dealer in New Jersey doesn't need many words to explain the success of German cars. Well, listen, our sales pitch for German cars is they're the best cars on the road. BMW is the best-selling brand in the American luxury segment and sales were up again last year. But then came the tariffs. It's already having an impact on business. Last year was a much more robust year. This year we're down a little bit in sales. But I think the consumer right now is very worried. They're trying to figure out where prices are going with these tariffs. Alarm bells are ringing for German car manufacturers. BMW, Mercedes, Volkswagen, Audi – profits have plummeted dramatically across the board in the second quarter. Not only because of the tariffs, but also because of them. Even though the tariffs have now been reduced from almost 30 to 15 percent. A 15 percent tariff on every exported vehicle will result in billions of dollars in additional costs for us. When exporting vehicles to the United States. The entire industry is geared towards exports. Three out of four cars manufactured in Germany are exported abroad. Most of these are in European Union countries. However, outside Europe, the US is the most important market and one with growth potential in contrast to Europe. The European car market has just been stagnant for now a long time. Sales have been very weak since 2018. The prospects are quite bad because the population in Europe is shrinking. So far, the tariffs have not made their full impact here. The cars currently available at US dealerships were imported into the country before the import duties were imposed. Nevertheless, BMW's at Tom Maoli's dealership have already become more expensive. We've edged our prices up based upon manufacturer's increases. Right now, the manufacturer is eating that cost increase. And that's because they have inventory that's already built. Once they burn through that, I suspect that they're ultimately going to start raising prices. And I think you may see a 10 percent increase across the board on all new vehicles. Another 10 percent markup. Now that could put off many customers. I probably would not buy one if it becomes too expensive. It is a great car, but it is a little pricey. I don't know that I need to spend that. At the car dealership, however, the mood remains positive. Tom Maoli believes that everything will settle down by next year. Until then, the trend will continue towards used cars. What we're doing is stocking up on used cars. Because if the price of the new car goes up and the payments start going up, consumers are going to start flocking to used cars. That's what they do historically. People will always drive. And whether new or used, it doesn't matter to Tom Maoli's business. German car manufacturers, however, will find it more difficult to adapt to the new market conditions.

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U.S. tariffs pile pressure on German carmakers

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