Audi to spend up to 9 trillion won on new U.S. factory

Plan to build a second phase by 2033... Request for half tariff forgiveness

Public opinion worsens in Germany after Audi CEO helped Trump campaign

(Berlin = Yonhap News) Correspondent Gye-yeon Kim = German automaker Audi plans to invest up to 9 trillion won in a new plant in Georgia, the U.S., Reuters reported on the 5th (local time).

According to a document from the Central Georgia Joint Development Agency, Audi plans to invest $3 billion (approximately 4.1 trillion won) by 2033 for the second phase of the Macon, Georgia plant construction project.

U.S. President Donald Trump announced the construction of a new Audi factory at an election campaign rally in Georgia on the 24th of last month and said, "We have decided to begin construction next month on a large-scale factory capable of producing 200,000 cars per year by investing $4.2 billion (about 5.7 trillion won)."

Audi said it would start operating a new factory in 2031 and produce sports utility vehicles (SUVs). Once the second phase of the project is completed, an additional 3,000 local workers will be hired by 2033 to the existing 4,500. The state of Georgia decided to give Audi 1,500 acres (approximately 6.07 million m2) of factory land and tax benefits worth 459 million euros.

Audi requested that the tariff on automobiles exported from the European Union to the United States be reduced from 15% to 7.5% in exchange for building a new factory, but Reuters reported that it is expected to agree with the U.S. Department of Commerce to around 10%.

Unlike competitors such as BMW, Audi did not have a production plant in the United States, so it was hit harder by the Trump administration's automobile tariffs. For this reason, we have been pursuing a plan to build a factory locally and negotiate tariff rates.

However, while parent company Volkswagen Group, known as the 'people's car' in Germany, is discussing closing the Audi plant in Neckarsulm, Germany to cut costs, there is public opinion that building a new large-scale plant in the United States is inappropriate.

Such criticism grew stronger when Audi CEO Gernot Djolner appeared on stage at President Trump's midterm election campaign. Some political and labor figures are demanding CEO Djolner's resignation, saying he served as a sidekick to Trump's election campaign. An anonymous Audi executive said, “It was an unrealistic scene and ruthless capitalism itself.”

There is also an analysis that uncertainty has been added to the plan to build the plant as the U.S. government has not clearly promised a tariff rate reduction and Democratic candidate Keisha Lance Bottoms was elected governor of Georgia in the midterm elections on the 4th.

Business magazine Handelsblatt reported that due to the change of government in Georgia, Audi is under time pressure to sign a contract before Governor Brian Kemp (Republican) leaves office in January next year.

Audi's new U.S. factory must pass the Volkswagen Group supervisory board, which includes the German government of Lower Saxony and worker representatives. Daniela Cavallo, president of the union's workplace council, said, "It has not yet been decided whether to approve the construction of a new factory." Local media reported that the Lower Saxony state government plans to agree to the establishment of a new factory only if the future of the existing factory in Germany is clearly presented.