Luxury German automakers are in focus as President Trump's evolving tariff policies weigh on Mercedes-Benz (MBG.DE, MBGAF) and Porsche (PAH3.DE). Yahoo Finance Autos Reporter Pras Subramanian outlines what investors need to know.

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Video Transcript

00:00 Speaker A

German automakers may be feeling the pressure from President Trump's auto tariffs. For more, bringing in now Yahoo Finance senior autos reporter, Pras Subramanian. Pras.

00:11 Pras Subramanian

Yes, so luxury brands like Mercedes and Porsche are getting getting squeezed here, right? By the 25% sector tariffs on their cars. So, we saw some results coming in for Q2. Mercedes' global sales down 9%, but US sales down 12%. Uh, Porsche sales also down globally, but they're higher in the US. But there's a little caveat. They're basically saying that they had to rely upon, you know, pre-tariff inventory that they already brought in. That that helped boost sales as well as the fact that they ate some of the of the tariff costs with protecting pricing. Uh, so that's kind of a problem. I spoke to Mercedes, too. They asked them about, "What are you guys going to do for the going the rest of the year?" They said, quote, "We recognize the importance of consistency and transparency for our customers, committed to maintaining current Model 20, Model Year 2025 pricing until further notice," meaning they're going to freeze prices for now. And for you, if you order a new car with for a 2025 Model Year new car. "We continue to monitor the situation closely. Are evaluating all options. Will adjust to changing market conditions in the competitive landscape." So what they're saying is that they can't do this forever, right? They can't price protect forever, and it seems like Model Year 2026 will see some changes from pricing point of view. Um, look, they they need a deal. They need a deal like the UK has with the US right now. You know, 10% is what they're what they're what they have. That's that'd be great compared to 25, but it's not perfect either.

02:35 Speaker A

Who's in a worse spot, Pras, Porsche or Mercedes?

02:40 Pras Subramanian

So, with Mercedes, at least they have a factory in Tuscaloosa, Alabama, where they make a lot of their SUVs and a lot of their EVs. Porsche makes everything in Germany and, I think, another plant in Slovenia. That's it. They're known for German engineering and, you know, kind of European handling and things like that. So, to make cars in, let's say, Indiana, it isn't really on brand. So they're kind of in a in a in a tight spot there. BMW, which hasn't released their full data yet, um, big plant in South Carolina where they built all their SUVs where they actually ship them out to other parts of the of the world.

03:22 Speaker A

All right, Pras. Thank you very appreciate it.  Related Videos

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