Automakers’ margins are generally very tight, making it difficult for them to absorb the expected price increases from President Trump’s 25 percent tariffs on imported vehicles. Despite that, import-heavy Mercedes-Benz said it would eat the tariff costs, at least for now.
Spokesperson Michael Minielly said, “We continue to monitor the situation closely, are evaluating all options and will adjust to changing market conditions and the competitive landscape if needed. The automaker imports around 35 percent of the vehicles it sells here, so it’s unclear how long Mercedes will be able to sustain the plan. At least the good news is that the European Union appears ready to negotiate with Trump, which could lead to significantly lower tariffs in time.
Mercedes isn’t in a terrible position to weather any challenges brought on by the trade actions. Despite relying on a large number of imported components, the automaker builds several models in the U.S., including the GLE, GLE, EQE, and EQS, making them immune to portions of the tariffs. The company is also working with dealers to clarify pricing and other details, reducing confusion and friction between buyers and the brand.
The decision to absorb tariff costs should help Mercedes, especially considering that some of its competitors have decided to halt imports in the short term to assess the impacts. Audi and Jaguar Land Rover both announced temporary pauses on vehicle shipments, though Jaguar wasn’t planning on shipping many units this year to begin with.
[Images: Mercedes-Benz]
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