Audi Plans $4bn Georgia SUV Plant as Volkswagen Wrestles With US Tariffs

Audi has committed $4bn (£3bn) to build its first factory in the United States, a move that comes as its parent company, Volkswagen, grapples with the cost of steep tariffs imposed by Donald Trump.

Audi chief executive Gernot Döllner appeared on stage with Trump at a campaign rally on Saturday night to reveal that the plant will be located in Macon, Georgia. It is an unusual step for a major European automotive brand, coming only days before the US midterm elections.

Trump's Republican party is trying to hold onto both houses of Congress but is polling poorly. It is contending with higher fuel prices linked to the president's war on Iran, as well as a trade war with some of the country's largest trading partners.

Trump has long argued that his tariffs are boosting American manufacturing jobs, and he has been quick to highlight new factory investments. Employment in US vehicle and parts manufacturing has nonetheless dropped since he returned to office last year.

Audi says the plant will aim to produce 200,000 SUVs and create 4,500 jobs. It will assemble the Q7, Q8 and Q9, with some output moving from Bratislava in Slovakia.

Audi, Volkswagen's most important premium brand, has been hurt by the 15% tariff on EU imports and by the administration's push to reduce sales of battery electric vehicles in favour of petrol cars. Volkswagen has said the tariffs cost it up to €5bn (£4.2bn) a year, before accounting for lower sales. This month it said it still faced "continued high pressure from import tariffs". The company has also had to move some production of its cheapest models, including the Jetta saloon and Taos SUV, from Mexico to the US.

The investment could inflame tensions in Germany, where Volkswagen has begun cutting as many as 100,000 jobs and closing factories. The company has pointed to fierce competition from Chinese carmakers, the tariffs, and the heavy spending required to shift to electric vehicles in markets outside the US.

Döllner said he accepted the invitation to speak at the rally out of respect for the US. "We are planning to bring our biggest and most premium SUVs, and produce them here in Macon, Georgia," he said. "This is a long-term investment because we believe in the American market."

Volkswagen chief executive Oliver Blume told investors in July that "US tariffs create a significant burden and restrict international trade". Even so, the group says American demand for Audi's large petrol SUVs remains strong, and it is developing the Q9, its largest SUV yet, with US buyers in mind. Large petrol-powered SUVs have contributed significantly to global carbon emissions.