Porsche, Aston Martin hike U.S. prices as hopes for tariff sweeteners fade

A long line of unsold 2023 luxury sports-utility vehicles and coupes sits at an Aston Martin dealership Sunday, Aug 27, 2023, in Highlands Ranch, Colo. AP, David Zalubowski

BERLIN — European luxury carmakers including Porsche and Aston Martin have shot to the front of the grid with U.S. price hikes, which could point the way for bigger brands to follow in their wake as companies pass on the cost of tariffs.

The United States and Europe reached a trade deal that will see EU-made cars hit with a 15 per cent tariff from August, lower than once threatened but far higher than the 2.5 per cent rate before U.S. President Donald Trump launched his trade offensive this year.

On Wednesday, Volkswagen’s luxury brand Porsche said it had raised U.S. prices by between 2.3 and 3.6 per cent in July, with no plans for now to establish a U.S. production presence - a move that would let it avoid the levies.

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“This is not a storm that will pass,” Porsche CEO Oliver Blume said after the company cut its full-year profit target and flagged a US$462 million hit from tariffs in the first half. “We continue to face significant challenges around the world.”

U.S. tariffs have pummeled global automakers, forcing companies such as GM, Volkswagen, Hyundai and Mercedes-Benz to book billions of dollars of losses, issue profit warnings, slash forecasts and raise prices.

Japanese carmaker Nissan reported a US$535 million quarterly loss on Wednesday, hit by U.S. tariffs, restructuring and lower sales volumes.

British sports-car maker Aston Martin said it had made incremental price increases in the United States since last month, issuing a profit warning citing a hit from U.S. import tariffs and prolonged suppressed Asian demand.

Additional costs

While bigger carmakers have so far held off, other sectors have seen price hikes as companies have looked to pass on the additional cost of tariffs. Analysts said larger carmakers could do similar in the second half of the year.

“Into H2, we are looking to gain additional visibility with regards to the ability of Mercedes-Benz and the rest of the premium OEMs to increase prices in the U.S. in order to offset the impact of tariffs,” J.P. Morgan said in a note.

European carmakers are also getting less optimistic that they could seal extra sector-specific tariff reductions, resigned to dealing with the 15 per cent rate.

Mercedes CEO Ola Kaellenius told analysts on Wednesday that the group was assuming tariffs would remain at 15 per cent, throwing cold water on hopes companies may be able to negotiate individual deals.

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“For all intents and purposes, that global deal for now is it,” said Kaellenius, also president of Europe’s car lobby ACEA. Any side deals were “very uncertain.”

Volkswagen had said last week it was hoping investment commitments could help it negotiate lower U.S. tariffs.

But Porsche CEO Blume, also head of VW, suggested there would not be a separate U.S. deal for the automotive sector.

“I agree with Ola Kaellenius’ assessment that there will not be a separate automotive deal,” Blume said.

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Reporting by Alessandro Parodi, Amir Orusov, Rachel More and Shashwat Awasthi; Additional reporting by Ilona Wissenbach; Editing by Adam Jourdan and David Holmes