German automaker Mercedes-Benz has decided to increase local production in the United States to reduce the cost burden caused by U.S. tariffs.
On May 1 (local time), Mercedes-Benz announced in a press release that it would localize production of "core segment" vehicles at its Tuscaloosa plant in Alabama. The company did not specify which models would be produced locally. The term "core segment" typically refers to the C-Class and E-Class vehicles, which are generally compact and mid-size models.
The Tuscaloosa plant, which has been in operation since 1997, produced approximately 260,000 vehicles last year, primarily focusing on sport utility vehicles (SUVs) and off-road vehicles. The most popular model in the U.S. is the GLC SUV, with 64,163 units sold last year.
Bloomberg News previously reported that Mercedes-Benz was considering discontinuing sales of entry-level models such as the GLA due to tariffs. The reason is that these models have low profit margins, so if the company does not pass the tariffs on to consumers, it could incur losses.
Volkswagen Group has also announced its intention to produce Audi vehicles locally. Since Audi does not have a production base in the U.S., all Audi vehicles sold in the country are subject to a 25% tariff on automotive items.
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