Volkswagen has just made headlines in the past week by introducing the more exciting version of the Volkswagen Tiguan, which apparently can produce even more power if the customer wants to. But in the shadows of the limelight lies a problem that the German marque has to face – it will be raising its prices in the US soon as a result of President Donald Trump’s blanket tariffs on the automotive industry.
Volkswagen
Volkswagen is a mainstream automaker founded by the German Labour Front in 1937 as the “people’s car” company. Famous for the Volkswagen Beetle, Type 2 Bus, and modern classics like the Golf and Jetta, Volkswagen has emerged as one of the world’s largest automakers and a subsection of the larger Volkswagen Group, which either directly or indirectly owns controlling stakes in Porsche, Audi, Bentley, Skoda, Lamborghini, Bugatti, Rimac, Seat, and more.
- Founded
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28 May 1937
- Founder
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German Labour Front
- Headquarters
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Wolfsburg, Germany
- Owned By
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Volkswagen Group
- Current CEO
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Thomas Schaefer
If you’re eyeing buying a Volkswagen this April and even next month, you need not worry about any price hike as the company assures its customers there won’t be any changes. In an interview with Bloomberg, Kjell Gruner, VW’s North America chief executive officer, isn’t even sure about the immediate tariff environment, but he wants to give “consumers and dealers that confidence until end of May.”
Only Two VWs Are Made In America
Volkswagen’s move to protect its customers from price increases mirrors what other automakers have previously announced. Ford, Stellantis, and Hyundai (and Genesis) have all assured buyers that there will be no movement in pricing until June, but just like VW, some of them can only hold out on the price hike for too long.
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Despite having an assembly plant in the US in Chatanooga, TN, Volkswagen is one of those brands that will be hit hard by the tariffs. The Atlas and Atlas Cross Sport are the only models in VW’s lineup that are assembled in America, with the rest being imported from various nations. Even the newly launched Tiguan is being assembled in Mexico, which will face up to 27.5 percent tariff.
Pricing Strategy After May Still Indefinite
Gruner clarified in the Bloomberg interview that previous communications about Volkswagen’s pricing strategy amid the tariff issues were misconstrued. It was reported before that VW would pass the import fees directly to the customer, which wasn’t true. The memo was meant to ask input from dealers regarding the pricing strategy, he said.
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Volkswagen still isn’t definite in its pricing strategy after May. Gruner said the tariff costs can be spread among suppliers, dealers and consumers. That said, Gruner said that any price increase starting in June will be carefully evaluated, with tariff impacts, supply chain factors, and competitor pricing strategies to be taken into account.
Source: Bloomberg
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