Mercedes Loses U.S. Sales Momentum in Midst of Trump Trade Threats

• April 03 2018
• Gabrielle Coppola

Sales momentum is fading for Germany’s biggest luxury automakers in the U.S. just as President Donald Trump threatens trade actions that could make their cars costlier.

Sales momentum is fading for Germany’s biggest luxury automakers in the U.S. just as President Donald Trump threatens trade actions that could make their cars costlier.

BMW AG’s namesake brand outsold Daimler AG’s Mercedes-Benz for the first time this year, eking out a 1 percent gain in March. The increase, driven by the 5 Series sedan, was BMW’s smallest gain in five months. Mercedes deliveries slipped 2.4 percent as demand for its top car, the C-Class, plunged.

Trump threatened to tax German-made cars sold in the U.S. in a stump speech near Pittsburgh last month, escalating a spat with the European Union over steel and aluminum tariffs. The barbs keep coming despite German automakers taking pains to showcase their U.S. production footprint, with BMW inviting the president to its plant in South Carolina last year and Volkswagen AG expanding production in Tennessee.

“We’re all concerned that in a market that’s slowing, we’re looking at a significant price increase,” said Marc Cohen, vice president of Priority 1 Automotive Group in Baltimore and a member of the American International Automobile Dealers Association. “It’s gotten enough talk that it’s on our radar screen.”

Even after its slip up in March, Mercedes still led its arch rival by nearly 5,000 U.S. vehicle sales at the end of the first quarter.

Trump suggested last month that the U.S. could introduce a 25 percent tax on cars from the EU. He said during a press conference with the Swedish prime minister that the U.S. “has been mistreated” and “taken advantage of by other countries.” American companies face 10 percent levies on cars and parts going into Europe, while EU companies pay 2.5 percent to ship them here.

The U.S. has since said it would initially shield a list of allies, including Europe, from steel and aluminum tariffs.

American-Made SUVs

In Alabama, Daimler produces more of its sport utility vehicles than anywhere else globally and is in the midst of a $1.3 billion expansion. BMW’s biggest factory in the world is in Spartanburg, South Carolina, which makes X3, X4, X5 and X6 SUVs for customers in the U.S., Germany and elsewhere.

“We feel that our footprint puts us in a very positive, strong position,” Bernhard Kuhnt, president of BMW of North America, said in an interview at the New York International Auto Show last week.

Volkswagen’s Audi, whose luxury SUVs drove a 7.4 percent sales gain in March, is more vulnerable to any tariffs on imported cars because it doesn’t have a plant in the U.S. Its top-selling Q5 SUV is made in Mexico.

Though it’s been spared from Trump’s ire, Toyota Motor Corp.’s Lexus also slowed in March. Total sales slipped 3.2 percent as sedan deliveries fell 13 percent.

— With assistance by David Welch