Mercedes-Benz stocking inventory in US ahead of tariffs, analyst note says
Mercedes-Benz is aggressively building up inventory levels in the US market ahead of new import tariffs that take effect on April 3, 2025. The move is aimed at mitigating the impact of a planned 25% tariff on imported cars, which could hit the company's gross profit margin by about 2.5 percentage points before mitigation measures are implemented.
Mercedes-Benz executives said on a call with analysts that they will monitor the reactions of competitors before adjusting their pricing strategy. They stressed that no automaker operates in isolation and will watch how rivals react when tariffs are imposed.
Mercedes-Benz's first-quarter results were in line with full-year forecasts, with expected profit of 1.57 billion euros and a profit margin of 6.4%. However, sales fell slightly from the previous year due to weaker performance in China and Europe. In 2024, Mercedes-Benz Cars and Vans sold 374,000 vehicles in the US, accounting for 15.6% of the company's global sales.
In response, other European automakers are also looking to increase production in the US to avoid tariffs. Volkswagen's Audi brand, for example, plans to expand production in North America, while Mercedes-Benz will increase production at its plant in Tuscaloosa, Alabama.
The imposition of a 25% tariff on cars and parts imported into the US has drawn strong reactions from major automakers around the world. BMW said a trade war "would not be beneficial" and called on the US and the EU to quickly reach an agreement to avoid escalating the conflict.
Against this backdrop, automakers are weighing whether and by how much to raise prices, with companies reluctant to reveal their plans due to concerns about the backlash from the US government. The price increases could impact consumer demand and automakers’ market share in the US market.
Overall, the global auto industry is facing significant challenges from new US tariff policies, requiring companies to adjust their business strategies to remain competitive and profitable.