Going Strong: German Cars Continue to Conquer the USA Market, despite Tariff Threats
Foreign demand for German cars is on the rise
Even as Europe and, thus, Germany face potential tariffs from the USA, including on car exports, the market remains the strongest in terms of sales for German manufacturers. Despite concerns about increased tariffs, exports are on the rise. One vehicle group, in particular, is feeling positive.
According to data from the Federal Statistical Office, Germany's automotive industry exported more new passenger cars in 2024. Surprisingly, the USA emerged as the most significant sales market. However, the looming threat of additional tariffs under President Trump could hit German car manufacturers and suppliers hard, who are already struggling with profit losses.
Catching Up: Top German Cars Exported Worldwide
Last year, approximately 3.4 million new passenger cars, worth around 135 billion euros, were delivered from Germany to the global market. Compared to the previous year, the export volume increased by 2.5 percent, but the value of exports dropped slightly by 1.3 percent. The export of electric vehicles grew by nearly 12 percent to around 881,000 passenger cars, accounting for over a quarter of the total.
No other country imported as many new passenger cars from Germany as the USA – they topped the list with a share of 13.1 percent of exports, followed by the UK (11.3 percent) and France (7.4 percent). Exports to the USA have consequently increased compared to the previous year. However, overall exports are still below the pre-Corona level of 2019, with 3.5 million vehicles[5].
Imports Decrease Dramatically
Around 1.8 million new passenger cars were imported into Germany in 2024. This represents a decrease of 11.5 percent in quantity and 12.8 percent in value when compared to the previous year.
Economic Challenges Ahead
The figures reveal the vulnerability of the German automotive industry in the event of new US tariffs. Trump has threatened a 25 percent import tariff on cars from the EU. Current tariff rates for car imports from the EU to the USA stand at 2.5 percent, while the EU charges 10 percent[4]. Mercedes CEO Ola Källenius has urged for the abolition of all tariffs on cars in the trade dispute, advocating for zero tariffs between the EU and the US[6].
Potential Falling Profit Margins for BMW
Additional US tariffs would not only burden Mercedes but the entire industry. The US market is crucial for all German car manufacturers – almost every third Porsche and every sixth BMW was sold in North America in 2024, with VW, Audi, and Mercedes-Benz each having a share of 12 to 15 percent.
BMW predicts significant financial losses if the USA raises the import tariff for cars from the EU to ten percent. German suppliers would also be significantly affected by higher tariffs. Just last week, ZF from Friedrichshafen announced a billion-dollar loss[5].
Escalating Trade Conflict
The trade conflict between the EU and the US is on the brink of escalating. Trump has already implemented US tariffs of 25 percent on steel and aluminum imports. In response, the EU announced retaliatory tariffs on a range of American products, including bourbon whiskey and motorcycles. Further steps are planned for mid-April[7]. Trump, in turn, threatened the EU with tariffs of 200 percent on wine, champagne, and other alcoholic beverages.
Sources:
[1] ntv.de[2] as/dpa[3] wirtschaftswoche.de[4] handelsblatt.com[5] vda.de[6] handelsblatt.com[7] dw.com
Insight: Economic Challenges
Germany's automotive industry faces considerable economic challenges due to ongoing trade tensions. The increased tariffs have resulted in decreased production and potential job losses, and the German economy experienced two consecutive years of recession, which exacerbated the industry's struggles.
Insight: Supply Chain Disruptions
Companies like Volkswagen, BMW, and Mercedes-Benz are exposed to supply chain disruptions caused by tariffs, as they have factories in regions targeted by tariffs. This could diminish cost advantages when producing in these regions.
Insight: Production and Sales Impacts
The tariffs threaten to increase production costs and sales prices, potentially reducing demand for German cars in the US market, leading to discussions about diversifying sales to other markets to mitigate dependence on the US.
Tone: Informal, Approachable, Straightforward
- Automotive industry
- Automakers
- German car manufacturers
- Electric vehicles
- German exports
- Exports
- USA
- Tariffs
- BMW
- Volkswagen
- Mercedes-Benz Group AG
- Despite the ongoing tariff threats from the USA, the automotive industry, particularly German car manufacturers, have continued to prioritize vocational training to improve production efficiency and maintain their competitiveness in the global market.
- In an effort to make exports more appealing amid increased tariffs, certain German car manufacturers, such as Audi, have been exploring innovative strategies for reducing costs and improving their price competitiveness without compromising on quality.
- According to the Federal Statistical Office, the recent growth in German automotive exports, particularly in electric vehicles, has been bolstered by the demand for environmentally friendly cars in emerging markets, like China, and early adoption of statistical models to predict market trends and optimize production accordingly.
