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Audi, BMW, Mercedes-Benz exposed to U.S. import tariffs

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Audi considering passing some of tariff costs on - CFO

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Mercedes: decision on U.S. production depends on

competition

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Mercedes: Could consider importing cars from South Africa

(Adds Mercedes-Benz comments on tariffs, recasts with context)

By Alexander Hübner, Christoph Steitz and Victoria Waldersee

INGOLSTADT/BERLIN, Germany, March 18 (Reuters) - German

premium carmakers exposed to U.S. import tariffs are weighing

long-term strategies from raising prices and lowering output to

shifting production to deal with the added cost.

Volkswagen's premium Audi brand said on Tuesday

it 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", and seeking a "sweet spot" between price

increases and adjusting production.

Audi has no factories in the U.S. and makes its most popular

model in the country, the Q5, at its plant in San Jose Chiapa,

Mexico - a country targeted by Trump in his tariff push.

Also on Tuesday, Mercedes-Benz' production chief Joerg

Burzer said the carmaker's decision on whether to carry on

importing its GLB crossover from its joint venture in Mexico to

the U.S. depended partly on whether its competitors responded to

tariffs by localising production in the U.S.

Audi said the brand will announce this year where in the

region it will start producing its main models for the U.S.

market.

Another potentially promising option for Mercedes-Benz was

to import vehicles from South Africa, which has duty-free access

to the U.S., Burzer said.

"Of course, that could change any day," Burzer added. "I

have never seen such a complex environment... the key competence

you need today is flexibility."

HOPE FOR AGREEMENT

Trump earlier in March agreed to exempt automakers for a

month from his punishing 25% tariffs on Canada and Mexico if

they complied with existing free trade rules.

BMW, which does not comply with those rules, told U.S.

dealers it would pay for the cost of the tariffs itself for the

next few weeks, as executives await clarity on how long tariffs

will last.

"There are numerous plans lying in drawers, so one can take

action when necessary," Jan Mischke, partner at the McKinsey

Global Institute, said, adding carmakers were waiting to pull

the trigger until they had clarity.

The European Union is in talks with the U.S. government to

seek a solution on what Trump has called reciprocal tariffs,

which could lead to added duties on EU imports.

Audi's Chief Financial Officer Juergen Rittersberger said he

still hoped for an agreement.

The Audi Group, which also includes the Bentley, Lamborghini

and Ducati brands, said on Tuesday it expects an operating

margin of 7-9% this year, up from 6% in 2024.

Audi on Monday unveiled up to 7,500 job cuts in a push to

raise margins and lower costs, bringing total cuts planned by

the Volkswagen Group by the end of the decade to just below

48,000, or 7.8% of its global workforce.

($1 = 0.9133 euros)