Audi to Build Factory in Georgia, Trump Says

Audi, Volkswagen’s luxury car division, plans to build a factory in Georgia, its first in the United States, President Trump said at a rally in the state on Saturday.

A factory in the United States would help Volkswagen and Audi reduce their exposure to Mr. Trump’s 25 percent import tariffs on foreign vehicles and auto parts that have been deadly for sales. Audi imports all the vehicles it sells in the United States from factories in Europe or Mexico.

Volkswagen has a factory in Chattanooga, Tenn., but produces only one model there, the Atlas sport utility vehicle. Other Volkswagen models are imported, in many cases from Mexico.

Audi will invest $4 billion in the factory south of Macon, which will be able to produce 200,000 vehicles a year, Georgia officials said. Audi will begin grading earth at the site this year but it will not reach full production until 2031.

Mr. Trump portrayed the investment as a sign that his tariffs, which economists have said are inflationary, had inspired Audi’s decision. “Without tariffs, they would not have been coming in,” Mr. Trump said.

Audi will produce sport utility vehicles at the site, Gernot Döllner, the head of Audi, said after being called to the stage by Mr. Trump.

BMW and Mercedes-Benz, Audi’s main rivals, have long had factories in the United States — BMW in South Carolina and Mercedes in Alabama — where they mainly produce sport utility vehicles.

By promising to invest in a key battleground state, and giving Mr. Trump something to brag about, Volkswagen may be hoping to win concessions from the White House that would lower the tariff burden and help the company revive flagging sales in the United States.

“We can do something with you because you’re building your cars in the United States,” Mr. Trump said.

Sales of Volkswagen cars in the United States, including the Audi and Porsche brands, slumped almost 10 percent in the third quarter, according to estimates by Cox Automotive. With a market share of 3.4 percent, Volkswagen is a minor player in the United States even though it is the second-largest carmaker worldwide after Toyota.

The German carmaker has been trying for decades to increase its sales in the United States to a level commensurate with its global stature. The United States is particularly attractive because it is one of the few markets where there is no competition from Chinese carmakers. Chinese cars are effectively barred from the United States by tariffs of more than 100 percent.

Volkswagen is already building a factory in South Carolina to manufacture pickups and sport utility vehicles using the Scout brand beginning next year.

Such projects are risky. Automakers including Volkswagen are already burdened with underused factories that weigh on profits. Volkswagen, which has lost market share in Europe to Chinese automakers like BYD and Geely, has said that it may need to close or sell four factories in Europe.

Richard Fausset contributed reporting.