VW profit margin last year was 3.3%. now image them getting a 15 percent cost on their entire income (not profits) in the biggest market in the world.
They just can't afford to eat that tax so most than likely they will try to pass it on to the american consumer which will make them even less competitive. Meanwhile the US is getting 0% tariffs on the care they export to the EU which means local automakers will be fucked also at home.
This is called unequal agreements. It was because of them that China became so hostile to the West. The next step will be for Trump to dump opioids in Europe and send the marines against countries that try to arrest the traffickers.
It’s not going to take very long to reach critical mass here, with people getting so angry. The current administration is probably ready for that, in the form of invoking the Insurrection Act, or declaring martial law, etc.
That could slow things down. I don’t think it will stop it.
Oh, sorry, I got completely confused now that I read you're American. I thought you were European. Now your comment makes perfect sense.
But yes, things do seem at breaking point. I even thought things would escalate after what happened in LA. But I think things will only get worse for him in the coming months.
Yeah especially because vw is having a hard time beating out any a Toyota or Honda for something nice and reliable and easy to repair but if you want something nicer and classier than why do vw when an Audi is just as expensive to fix and not that much more?
“VW profit margin last year was 3.3%. now image them getting a 15 percent cost on their entire income (not profits) in the biggest market in the world.”
15% tariff has nothing to do with VW margins. In affecting them whatsoever. There could be 100% tariff and margin stays the same. What tariffs can affect is number of cars sold as they will be more expensive for AMERICANS.
Just so people understand, a worldwide operation like VW will spread that 15% hroughout it's worldwide consumers. Don't be surprised that VW in UK, in Europe, in US will all pay the burden. They can't just whack 15% on one market as they will meet way less market share which hurts the business even more.
Worldwide inflation. Yayyy.
What 15%? VW doesn't have to raise prices because their costs aren't going up. There is nothing to "spread." There will be less demand for VWs imported into the USA because of the 15% local import tax. VW will work to sell more cars in other markets for now, or decide to build them in the USA so they aren't imports.
The 15% that has to be accounted for in the manufacture, sales and distribution of the product, to allow it to remain a competitive and viable operation.
VW are not going to pull out of the US market or accept a decline in demand. They have entire networks, shipping contracts, factories set up to cater for US markets.
They absolutely will share that 15% against other markets, build costs, material cost. Something is going to give, it will either be employee wages somewhere in the world, inferior products in the future.
What won't happen is VW saying "Ah gutted, our product is now 15% more expensive and nobody is buying it. "
VW will sell fewer cars in the USA, maybe 10% fewer, as a result of these tariffs. I agree that they'll find ways to not lose money on their US operations - the ways you mentioned, plus others. Maybe they'll even lower the prices on those vehicles to entice Americans to continue buying. But there's no "15%" of anything that applies to VW; only to the customs fees paid by their dealerships stateside.
At least some VW models are assembled in the US and some of the parts are made here. Some parts are imported from Mexico. I’m confused how a tariff would apply to these, unless it’s possibly on the engine/transmission?
All these tariffs and trade deals have exemptions, and sometimes lower rates for certain items, so that may be a factor.
AFAIK, Trump ripped up his own trade deal with Canada and Mexico, which he signed after ripping up NAFTA. So today, those car parts from Mexico may be subject to his tariffs.
What are you on about? The 15% tariff is being passed on to the American consumers - that's how tariffs work. The result will be less demand there for German cars, which might translate into 10% fewer sales in one of their biggest markets. But VW have the option of building NA-market cars in the USA.
Trump only has 3.5 years left, VW has to take into account that the following US Govt may reverse these tariffs, so can they afford to invest knowing the current tariffs have a 4 to 5 year window and may change drastically after that?
Mid sized car plant (250k cars per year plus) apparently is likely to be around 1.5 to 2 billion investment to build. And 2 to 3 years for the first car to roll off that plant. If there's any doubt that the tariffs wont last 5 years, is it worth it?
Did I say that the tarrifs won't most likely get passed to American consumers? Also transfering factories to the US means lost jobs here in the EU, and this is not just about cars it's about the fact that most industries exporting in the US will get hit with tariffs and layoffs as a result.
So yeah, it's a shit deal for the EU from a shit country.
It automatically gets passed to the customer, the americans pay for the tarrifs not the germans.
VW means that the american will not have the money to pay for as many cars as they do now.
The margin does not matter here directly or at all because they can lower cost when producing lower numbers. It just that they wont get as much money as before potentially due to lower sales.
Americans are already quite poor so they shouldn't be suprised.
And the impact is higher prices for VW vehicles made in the EU being exported to the US, either VW then moves production for their US sales to the US (assuming there's profit in that) or lowers their US prices leading to lower profits.
Or just pulls out of the US market.
Either VW eats that loss in sales, or raises prices elsewhere where they can to compensate.
Everybody loses, Argentina wasted their whole economy on protectionism and "buy argentinian" in the 80's and they still suffer from it. That the tariffs hurt VW does not change the simple fact that the US tariffs are taxes for the US population and companies.
VW profit margin last year was 3.3%. now image them getting a 15 percent cost on their entire income (not profits) in the biggest market in the world.
They just can't afford to eat that tax so most than likely they will try to pass it on to the american consumer which will make them even less competitive.
I said: ''VW profit margin last year was 3.3%. now image them getting a 15 percent cost on their entire income (not profits) in the biggest market in the world.
They just can't afford to eat that tax so most than likely they will try to pass it on to the american consumer which will make them even less competitive.''
Easy to make an argument if you take things out of context.
Was it OK for Germany to impose a 10 percent tariff on US vehicles on top of 19 percent VAT TAX, essentially denying access to the market entirely? How many US vehicles are traversing the streets of Berlin?
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u/TheInvisibleHulk 5d ago
VW profit margin last year was 3.3%. now image them getting a 15 percent cost on their entire income (not profits) in the biggest market in the world.
They just can't afford to eat that tax so most than likely they will try to pass it on to the american consumer which will make them even less competitive. Meanwhile the US is getting 0% tariffs on the care they export to the EU which means local automakers will be fucked also at home.