00:00German cars are number one in the US when it comes to luxury.
00:04Many of them are manufactured in Europe or other countries and imported.
00:09Donald Trump wants to put a stop to that.
00:12Will tariffs spell the end of a German success story?
00:16This car dealer in New Jersey doesn't need many words to explain the success of German cars.
00:23Well, listen, our sales pitch for German cars is they're the best cars on the road.
00:28BMW is the best selling brand in the American luxury segment.
00:33And sales were up again last year.
00:35But then came the tariffs.
00:37It's already having an impact on business.
00:40Last year was a much more robust year.
00:42This year we're down a little bit in sales.
00:44But I think the consumer right now is very worried.
00:46They're trying to figure out where prices are going with these tariffs.
00:50Alarm bells are ringing for German car manufacturers.
00:54BMW, Mercedes, Volkswagen, Audi.
00:57Profits have plummeted dramatically across the board in the second quarter.
01:01Not only because of the tariffs, but also because of them.
01:05Even though the tariffs have now been reduced from almost 30 to 15 percent.
01:11A 15 percent tariff on every exported vehicle will result in billions of dollars in additional costs for us when exporting vehicles to the United States.
01:24The entire industry is geared towards exports.
01:27Three out of four cars manufactured in Germany are exported abroad.
01:31Most of these are in European Union countries.
01:34However, outside Europe, the US is the most important market and one with gross potential in contrast to Europe.
01:41The European car market has just been stagnant for now a long time.
01:47You know, sales has been very weak since 2018.
01:51The prospects are quite bad because the population in Europe is shrinking.
01:56So far, the tariffs have not made their full impact here.
02:01The cars currently available at US dealerships were imported into the country before the import duties were imposed.
02:09Nevertheless, BMWs at Tom Maoli's dealership have already become more expensive.
02:16We've edged our prices up based upon manufacturer's increases.
02:21Right now, the manufacturer is eating that cost increase.
02:24And that's because they have inventory that's already built.
02:27Once they burn through that, I suspect that they're ultimately going to start raising prices.
02:33And I think you may see a 10 percent increase across the board on all new vehicles.
02:37Another 10 percent markup. Now that could put off many customers.
02:42I probably would not buy one if it becomes too expensive.
02:47It is a great car, but it is a little pricey. I don't know that I need to spend that.
02:54At the car dealership, however, the mood remains positive.
02:57Tom Maoli believes that everything will settle down by next year.
03:01Until then, the trend will continue towards used cars.
03:05What we're doing is stocking up on used cars because if the price of the new car goes up and the payments start going up,
03:13consumers are going to start flocking to used cars. That's what they do historically.
03:17People will always drive. And whether new or used, it doesn't matter to Tom Maoli's business.
03:24German car manufacturers, however, will find it more difficult to adapt to the new market conditions.
03:30French car manufacturers,uetooth
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