Tariff Crisis and Platform Strategy: Audi's U.S. Factory Plans Collapse, Leading to Supply Chain Reorganization Including Tires

There has been a major shift in Volkswagen Group’s management policy. CEO Oliver Bloom announced the official abandonment of the dedicated production platform concept for Audi in the United States. Under pressure from auto tariffs introduced by the Trump administration, the once ambitious business plans have lost their economic feasibility.

Serious Management Pressure from Tariffs: Loss of 2.1 Billion Euros

According to Bloom’s recent statement, during the first nine months of 2025 alone, Volkswagen Group has suffered a loss of approximately 2.1 billion euros (25 billion dollars) due to U.S. tariff policies. This amount is not just a financial figure but had such an impact that it fundamentally shook the strategic management decisions themselves.

Despite high-level discussions at Washington and the World Economic Forum in Davos, the company has yet to justify massive capital investments or secure a stable business environment through tariff relaxations. Under such uncertain circumstances, the strategy of building a new platform-based factory within the U.S. has become an unprofitable concept.

Strategic Realignment: Withdrawal of 10% Market Share Goal

Recall the situation in 2023. At that time, Audi was actively considering establishing a manufacturing base in the U.S. to utilize federal subsidies. Attractive incentive programs initially served as a strong motivation to push the project forward.

However, the situation rapidly deteriorated following a shift toward heavy taxation of European automakers. In response to this dramatic change in the business environment, Volkswagen was finally forced to withdraw its long-standing goal of capturing a 10% market share in the U.S. market. Bloom described this target as “outdated,” and the company has decided to shift toward a more conservative, phased growth strategy.

Rebuilding the Global Platform Strategy

As part of this strategic retreat, Volkswagen has decided to cut 20 billion euros from its five-year global investment plan. In other words, investments in core platform development and production infrastructure for automobiles have been significantly scaled back.

Dependency on Mexico and Ripple Effects on Tire and Parts Industries

Currently, Audi is the only major German luxury brand without an assembly plant in the U.S. Its North American supply chain heavily depends on facilities in Mexico, where critical components such as tires and engine parts are produced and sourced.

However, in reality, significant import tariffs are currently imposed on transportation routes from Mexico to the U.S. This means that the entire automotive parts industry, including tires, is facing cost pressures due to these tariffs. This layered tax structure presents new management challenges not only for Audi but for the entire global supply chain.

Audi’s strategic shift is not merely a decision by a single company but a symbol of the structural crisis facing the global platform-based automotive industry.