Volkswagen is closing in on a tariff deal with the US, the boss of the German carmaker has said, as it eyes up the market for affordable electric cars in Europe.
Europe’s biggest car manufacturer, which also owns the Audi, Seat and Porsche brands, has been hit hard by Donald Trump’s trade tariffs, announced in April. The levies, combined with a turbulent market, have already cost “several billions”, the chief executive, Oliver Blume, said.
While the Trump administration has agreed to reduce the current 27.5% tariffs on European cars and car parts to 15%, the lower rate would still “be a burden for Volkswagen Group”, Blume told Bloomberg TV.
Volkswagen has promised “massive” investments in the US as part of its efforts to secure a separate deal with the Trump administration that could lower its tariff rate below 15%.
“We don’t appreciate the asymmetric deal between US and EU, because it’s distorting the competition in Europe,” he said.
“We are counting on our own offer investing heavily in the US … and there we are in close contact and good talks with the US government, and we hope that we come to a quick solution also during the next weeks with the support from the US government to our investment.”
Blume has said the German group could consider localising the production of Audi cars and expanding exports out of the US.
The Volkswagen boss, speaking at a trade show in Munich on Monday, said its luxury car brand Porsche was being squeezed by a “sandwich” of tariffs and a weak Chinese market.
“It’s several billion euros on our balance sheet that this situation costs this year,” he told Reuters.
Trump’s tariffs on car imports are expected to hit Porsche particularly hard as, unlike VW models and the German rivals BMW and Mercedes-Benz, Porsche cars sold in the US are almost exclusively manufactured in Germany.
Blume also presented a concept for a new small electric car at the trade show, as Volkswagen sets out to capture a fifth of the compact electric cars market in Europe.
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“These models are built on one concept: e-mobility for everyone, at an attractive price and profitable,” he said.
Its rival BMW said it was preparing a Chinese version of its iX3 SUV to go on sale in 2026.
Jochen Goller, the sales chief at BMW, said the Chinese iX3 will get the same interior display as the European version but localised software will be tailored to Chinese tastes.
Trump’s trade war has triggered upheaval across the car industry. In the UK the Chinese-owned sports car manufacturer Lotus has said it will cut 550 jobs, which it blamed partly on uncertainty caused by tariffs.
Jaguar Land Rover announced it would axe up to 500 management jobs in the UK as part of a voluntary redundancy round, after it reported a slump in sales also linked to Trump’s tariffs. The UK’s biggest car manufacturer is dealing with disruption caused by a cyber-attack.