Volkswagen is pumping the brakes on plans to build an Audi plant in the U.S. until tariffs on European carmakers are reduced.
The details: VW CEO Oliver Blume said the company, which has been considering a new American manufacturing site since 2023, has decided to shelve the idea after taking a massive tariff hit in 2025, reports Bloomberg.
U.S. levies on European vehicle exports, which is currently 15%, cost Volkswagen €2.1 billion ($2.5 billion US) in the first nine months of 2025, said Blume.
According to the CEO, VW cannot afford to invest the kind of funding needed to open a new manufacturing facility given its current tariff burden.
“Reduction of costs in the short term and reliable business conditions in the long term are what we need,” Blume told Bloomberg when discussing the decision to put the new U.S. facility on hold.
Why it matters: For VW and Audi dealers, a delayed U.S. plant likely means a longer reliance on imported product, keeping pricing, content, and allocation more exposed to tariff swings and currency moves. That can limit flexibility on incentives and trim mixes versus rivals that are more localized, and it may slow the pace of fresh products specifically tailored to U.S. tastes.
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Between the lines: Despite shelving the plant for now, Volkswagen still views the U.S. as strategically important, just on a slower ramp.
An earlier target from Blume for VW to reach 10% U.S. market share has been scaled back, with the company now planning to grow its U.S. business in phases.
The budget for the company’s five-year planning round was trimmed to €160 billion ($190 billion US) to €180 billion ($213.7 billion US) two years ago.
The new five-year plan (which covers factory spend, new models, and tech investment) is expected to be unveiled in March.
Bottom line: Until tariffs ease or VW revisits U.S. production, VW and Audi dealers should plan for a world where volume growth is gradual and pricing power hinges on brand strength, mix, and experience, not big bursts of local capacity. Keeping a close eye on the March product/plant roadmap, and on any tariff moves out of Washington and Brussels, will be key to forecasting inventory, incentives, and competitive pressure over the next few years.
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