Volkswagen to build $4bn Audi SUV factory in US despite job cuts at home

Audi has said it will spend $4bn (£3bn) to build its first factory in the US, as its parent company Volkswagen struggles with the impact of steep tariffs imposed by Donald Trump.

The German brand’s chief executive, Gernot Döllner, joined Trump on stage at a campaign rally on Saturday night to announce the factory in Macon, Georgia, in an unusual move by a big European brand just days before the US midterm elections.

The Republican party under Trump is trying to retain control of both houses of Congress, but it is polling poorly as it struggles with higher fuel prices caused by Trump’s war on Iran, as well as his trade war against some of the US’s biggest trading partners.

Trump has long tried to convince voters that his tariffs are helping to increase the number of manufacturing jobs in the US, and has seized on any new factory investments. However, US vehicle and parts employment has fallen since Trump took office last year.

Audi, Volkswagen’s most important premium brand, has suffered from Trump’s 15% tariffs on imports from the EU as well as the president’s efforts to cut sales of battery electric vehicles in favour of petrol cars.

It said it aims to build 200,000 SUVs at the new US factory, creating 4,500 jobs. The factory will build the Q7, Q8 and Q9 SUVs, shifting some production from Bratislava in Slovakia.

Volkswagen has said Trump’s tariffs cost it up to €5bn(£4.2bn)a year, before the impact of lower sales. The German manufacturer this month said it was still struggling with “continued high pressure from import tariffs”. The carmaker was also forced to shift some production of its cheapest cars, such as the Jetta saloon and Taos SUV, from Mexico to the US.

The new factory may add to tensions in Germany, where Volkswagen has started to cut as many as 100,000 jobs and close factories. It has blamed the job losses on intense competition from Chinese carmakers, as well as the tariffs and a need to invest heavily in the shift to EVs for markets other than the US.

Döllner said he accepted the invitation to speak at Trump’s 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 at the event. “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”.