U.S. tariffs have taken their toll on a myriad of industries as the world continues to navigate the new international trade order instituted under President Donald Trump.
But this week, German automakers were in the spotlight as some of the world’s best-known Bavarian brands all reported the same thing: profits are falling, and tariffs are to blame.
The European Union has been able to negotiate its tariff burden down from 25% to 15%, but the 15% number still weighs heavily on automakers’ bottom lines.
German auto marque Volkswagen said that U.S. tariffs would cost the company up to 5 billion euros this year ($5.8 billion). Through the first three quarters, tariffs have shaved 58% off its year-over-year profit.
The company is shipping fewer vehicles to the States to avoid tariffs, and U.S. consumers are shying away from foreign brands that are now more expensive. Volkswagen’s sales in North America are down 11% through the first three quarters.
The German auto industry struggles extend well past just Volkswagen.
On Oct. 29, fellow German auto Mercedes-Benz Group reported a 70% year-over-year decline in EBIT to 750 million euros ($870 million) while overall revenue fell 7% to 32 billion euros ($37.13 billion).
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Mercedes says it has been carefully managing its U.S. inventory as its third-quarter net profit fell to 1.19 billion euros, down from 1.72 billion euros a year ago ($1.38 billion from $1.99 billion).
But it wasn’t all bad news for the luxury automaker on this side of the pond.
“Despite the noticeable impact of US tariff policy on the US trade balance, after a slight decrease in the first quarter, GDP in the United States grew visibly in the further course of the year,” the company said in its earnings release.
Overall, the company sold 12% fewer vehicles in the third quarter than it did the previous year.
The one bright spot was for the company’s “top-end” category, where it reported 10% growth in unit sales.
Despite the struggles, Mercedes-Benz reiterated its full-year guidance, unlike fellow German automaker Audi, which was forced to lower expectations due to the tariff impact.
Audi Group said that its financial performance in the quarter “reflects the challenging economic situation” all German automakers are finding themselves in.