Mercedes’ Tariff Plan Is to Stockpile Cars Before They Take Effect
Tariffs on imported cars launch this week, and Mercedes reportedly wants to build up as much inventory as possible before then. The post Mercedes’ Tariff Plan Is to Stockpile Cars Before They Take Effect appeared first on The Drive.
Car companies are scrambling to adapt to the United States’ 25% tariffs soon to be imposed on imported vehicles. The clock is ticking with April 2 set as the deadline; by April 3, the government will start collecting the tariffs. Per Reuters, Mercedes executives told investors during a call earlier this week that the automaker is stockpiling inventory in the U.S. ahead of that date to avoid paying the hefty markup for foreign-built cars and parts for as long as possible.
Mercedes didn’t respond to The Drive’s request for comment, but we’ll update this story if we get a statement.
Most car manufacturers have been quiet about their plans to adjust. American automakers are even pushing back a little, according to Automotive News, as they try to get the tariffs lifted on smaller parts like wiring harnesses that are made in Mexico. Tariffs on those components could still increase manufacturing costs by billions, and even if those efforts succeed, they’ll remain on fully built cars. That’s why Mercedes might want to stock up on product before the deadline.
The intended purpose of these tariffs is to encourage automakers to build more vehicles in the U.S. Several foreign car companies already have factories here, as Mercedes builds many of its SUVs in Tuscaloosa, Alabama; Volvo has a plant in Ridgeville, South Carolina; both Honda and Toyota have several manufacturing plants across the U.S.; and BMW builds almost all of its SUVs in Spartanburg, South Carolina. In fact, BMW is the biggest exporter of American-built vehicles by dollar value in the country. However, those brands still build a big fraction of their vehicles overseas, which is what the tariffs will apply to starting April 3. If Mercedes can sneak as many cars in under that deadline as possible, it will avoid some of that tariff hit for 2025.
Mercedes is already facing a down year for 2025, per Reuters. With $1.57 billion in first-quarter earnings, it’s already depressed from last year due to a decrease in Chinese and European sales. Its current profit margins are at around 6.4% but Mercedes is expecting U.S. tariffs to drop that margin by about 2.5%.
Other car companies may be doing the same, trying to get as far ahead of these new tariffs as possible. But doing so will only mitigate the damage done in 2025. If the tariffs persist beyond that, automakers will have to get even more creative to reduce costs.
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The post Mercedes’ Tariff Plan Is to Stockpile Cars Before They Take Effect appeared first on The Drive.
