How Mercedes-Benz SA could gain from US tariffs

Mercedes-Benz is the local arm of German carmaker Mercedes-Benz AG and builds the C-Class sedan for local and export markets at its East London plant. About 90% of the production is exported to countries including Australia, Japan and the US.

Shifting more production from European Mercedes plants to South Africa would be a boost for the local operation after it retrenched employees and moved from three to two shifts at its East London assembly plant last year in response to falling global demand for the C-Class.

“Of course that could change any day,” Burzer said. “I have never seen such a complex environment. The key competence you need today is flexibility.”

Hope for agreement

Earlier in March, Trump agreed to exempt automakers for a month from his punishing 25% tariffs on Canada and Mexico if they complied with existing free trade rules.

BMW, which does not comply with the rules, told US dealers it would pay for the cost of the tariffs itself for the next few weeks as executives await clarity on how long tariffs will last.

“There are plans lying in drawers so one can take action when necessary,” Jan Mischke, partner at the McKinsey Global Institute, said, adding carmakers were waiting to pull the trigger until they had clarity.

The EU is in talks with the US government to seek a solution on what Trump has called reciprocal tariffs, which could lead to added duties on EU imports.

Audi’s CFO Juergen Rittersberger said he hoped for an agreement.

The Audi Group, which also includes the Bentley, Lamborghini and Ducati brands, said on Tuesday it expects an operating margin of 7% to 9% this year, up from 6% in 2024.

Audi on Monday unveiled up to 7,500 job cuts in a push to raise margins and lower costs, bringing total cuts planned by the Volkswagen Group by the end of the decade to just below 48,000, or 7.8% of its global workforce.