As the world continues to grapple with the new international trade order imposed by President Donald Trump, the US tariffs have affected many industries.
But this week German automakers were in the spotlight as some of the world’s best-known Bavarian brands reported the same thing: falling profits and blaming tariffs.
The European Union managed to negotiate a reduction in the tariff burden from 25% to 15%, but the 15% number is still very heavy on car manufacturers.
German car brand Volkswagen has said the U.S. tariffs will cost the company up to 5 billion euros ($5.8 billion) this year. In the first three quarters, rates fell 58% from profits on a year-over-year basis.
The company is sending fewer vehicles to the States to avoid tariffs, and US consumers are shunning foreign brands, which are now more expensive. Volkswagen’s North American sales fell 11% in the first three quarters.
The struggles of the German auto industry go far beyond Volkswagen.
October 29 another German car group, Mercedes-Benz, reported a 70% year-on-year drop in EBIT to €750 million. EUR ($870 million), while total revenue decreased by 7% to EUR 32 billion. euros ($37.13 billion).
Related: Luxury carmaker takes a big hit
Mercedes says it is carefully managing its U.S. inventory as third-quarter net profit fell to $1.19 billion. EUR, compared to 1.72 billion euros a year ago ($1.38 billion from $1.99 billion).
But it wasn’t all bad news for the luxury carmaker on this side of the pond.
“Despite the notable impact of US tariff policies on the US trade balance, after a slight decline in the first quarter, GDP in the United States has grown significantly over the next year,” the company said in a statement.
Overall, the company sold 12% fewer vehicles in the third quarter than last year.
The only bright spot was for the company’s “high-end” category, where it reported a 10% increase in unit sales.
Despite the struggles, Mercedes-Benz reiterated its full-year guidance, unlike fellow German carmaker Audi, which was forced to lower expectations due to the impact of tariffs.
Audi Group said its financial results for the quarter “reflect the difficult economic situation” in which all German automakers find themselves.