Audi Enters US Manufacturing with Its First Plant in the United States
Audi plans to build a plant in the state of Georgia — its first manufacturing facility in the United States, President Donald Trump said at a rally in the state, according to The New York Times.
A US plant would help Volkswagen and Audi reduce their exposure to Trump’s 25% tariffs on imported cars and auto parts, which have weighed heavily on sales. Audi imports all the cars it sells in the United States from factories in Europe or Mexico.
Volkswagen has a plant in Chattanooga, Tennessee, but it produces only one model there — the Atlas SUV. The rest of Volkswagen’s models are imported, in many cases from Mexico.
Audi will invest $4.2 billion in the plant in Macon, which will have the capacity to produce 200,000 vehicles a year, Trump said. Construction is expected to begin next month, he added. Trump presented the investment as evidence that his tariffs — which economists have described as a factor driving up inflation — had motivated Audi’s decision. “They wouldn’t be coming without the tariffs,” he said.
Audi will manufacture SUVs at the plant, company chief executive Gernot Döllner said. Audi’s main competitors, BMW and Mercedes-Benz, have long operated factories in the United States: BMW in South Carolina and Mercedes-Benz in Alabama. Both plants primarily produce SUVs.
However, it will be years before an Audi plant in Georgia begins producing vehicles. By promising an investment in a key battleground state, while giving Trump an opportunity to claim credit, Volkswagen may be hoping to secure concessions from the White House that would ease the tariff burden and help revive its weakening US sales.
According to estimates by Cox Automotive, sales of Volkswagen vehicles in the United States, including the Audi and Porsche brands, fell by almost 10% in the third quarter. With a market share of 3.4%, Volkswagen is a relatively small player in the US market, despite being the world’s second-largest automaker after Toyota.
The German automaker has spent decades trying to increase its US sales to match its global standing. The American market is particularly attractive because it is one of the few where Chinese automakers have no presence. Chinese cars are effectively excluded from the US market by tariffs exceeding 100%.
Volkswagen is already building a plant in South Carolina, where it plans to begin producing pickups and SUVs under its Scout brand next year.
Such projects carry risks. Volkswagen and other automakers already have underutilized factories that weigh on their profits. The company is losing market share in Europe to Chinese manufacturers such as BYD and Geely and has said it may have to close or sell four of its factories in Europe. |BGNES
