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Car makers with exposure to the giant US car market are scrabbling for solutions to mitigate the predicated loss of billions in profits as a result of the sudden and highly punitive tariffs imposed by president Donald Trump.

General Motors said it had “pulled out the Covid playbook” in a bid to reduce costs after predicting that it will take a $4-5 billion (£3-4bn) hit on profits this year. 

Meanwhile, the Volkswagen Group said it was looking to bring more production the US to offset a situation what analysts have calculated will cost €2-4bn (£1.7bn-3.4bn) of profit this year.

Aston Martin and JLR have both paused shipments to the US after stuffing the market with models ahead of the tariffs starting.

Mercedes-Benz has calculated the tariffs will wipe off three percentage points of margin, which, based on 2024 figures, could be as much as €5bn (£4.3bn).

Meanwhile, Stellantis said it was taking actions “to protect the company in the short term”, including temporary shutdowns and layoffs.

The raft of tariffs include a 25% duty on light vehicles vehicles coming into the US from all countries globally from 3 April. 

A similar duty will be applied from 3 May to foreign parts imported to fit to cars built in the US.

Some relief will be given to those that produce cars in the US to mitigate the pain of ‘stacked’ tariffs, for example steel and aluminium tariffs hitting the production of parts made of those metals.

Vehicle exports from Canada and Mexico will be tariff-exempt but only if they comply with the requirement to include a certain percentage of regional parts – a clause that German companies in particular are struggling to comply with. 

Meanwhile, China has hit US car imports with a retaliatory 140% tariff, pretty much ending a lucrative export business for high-margin vehicles from the likes of BMW, Ford and Mercedes.

Ford said it had stopped shipping its F-150 Lightning to the country while Mercedes CFO Harald Wilhelm told investors on the company’s recent earning call that the tariffs hitting the US-built GLE and GLS heading to China were “prohibitive”.

Trump’s tearing hurry to rebuild an incredibly complex and globally interlinked business in order to force more manufacturing to locate in the US has been described as a “mid-air disassembly” by one commentator.

Meanwhile, car makers are throwing out parachutes to avoid the worst of the damage.

On the recent round of earnings calls, analysts pressured car makers on possible ways they could mitigate the tariff impact, but again and again, CEOs and CFOs had to point out how much of a long-term process it is to rebuild production and supply chains. 

Volkswagen said it was “evaluating” options to make more models at its Chattanooga plant in Tennessee, but CFO Arno Antlitz warned analysts on the company’s first-quarter earnings that it was “too early to say” whether such a solution was possible. 

Of the 730,000 vehicles that the Volkswagen Group sold in the US in 2024, only around  200,000 of them were produced in the US, with about 290,000 coming from Mexico and about 240,000 coming from Europe. 

Of the Group cars produced in Mexico, only Volkswagen models from the vast Puebla plant are compliant with the United States-Mexico-Canada Agreement (USMCA), which sets a 75% minimum regional value content before waiving the tariffs. Audi Q5s made in the José Chiapa plant aren’t compliant, mainly because their engines are shipped from Germany.

Like many car companies, Volkswagen has suspended its guidance (estimated financial performance) for 2025, saying it couldn’t properly assess the damage. 

Mercedes is another with a substantial production facility in the US, situated in Tuscaloosa, Alabama, where it makes big SUVs. But despite local production with a strong export focus (both key goals under the Trump regime), it will be hit hard. 

Along with the damage to exports to China, Mercedes will be hit by tariffs on engines sent to the US for SUV production to Europe.

The same problem will also affect the US production of BMW, which at the time of writing hadn’t updated its financial position after the first quarter.

“We have built up our internal-combustion-engine industrial structures in Europe over more than 100 years,” CEO Ola Källenius told investors. “To move them quickly to two other economic regions is probably prohibitive from a capital spending point of view.”

Aston Martin said it would have to raise prices to cover at least part of the tariff increase, but others warned that doing so risked ceded market share to those not so impacted.

“You can’t just push a button and say ‘okay, I have a tariff, let's just raise the price and everything stays the same’. That's not how market economy works,” Källenius said.

The bigger hit on car makers either building outside the US or with higher proportions of imported parts help those car makers more localised in the US.

“German lux brands are widely disadvantaged and so are the Koreans in the mid-level of the market,” John Murphy of investment bank BofA Securities pointed out in the GM analyst call. He suggested that Chevrolet and Cadillac could “lean into” the tariffs to take market share.

GM CEO Mary Barra agreed with Murphy wholeheartedly, saying: “There is a huge opportunity for us to continue to build and leverage our product strength and the fact that these vehicles are built in the US and have the USMCA compliance."

Stellantis is another sensing blood in the water. “We're looking at areas of opportunity where we have US-built vehicles that have very low impact from the tariffs against competitor vehicles that may be imported from places like Korea or Japan,” CFO Doug Ostermann said on its earnings call.

Three out of every five cars Stellantis sells in the US is made there, Ostermann pointed out.

All companies referenced the uncertainty ahead, particularly as the Trump administration keeps changing the parameters. The whole tariff picture could look completely different at the end of the year, making decisions extremely hard.

“I think [they will] try to mitigate some of the impacts, right, because I think they recognise that they don't want to hurt the profitability of the industry,” said Ostermann.

Companies recognise that winning over Trump is crucial to softening the worst of the impacts, so there were bizarre statements like the one from GM’s Barra declaring that she was “grateful to president Trump  for his  support of the US automotive industry” even as she was predicting a $4-5bn impact from his tariffs.

Others are hoping that carve-outs will be possible for some countries, for example South Korea (the source of much of GM’s budget models) or the UK. 

Aston Martin CEO Adrian Hallmark pressed UK prime minister Keir Starmer to continue pushing for a deal. “We're very optimistic about that – and the government, we know, are very focused on it,” he said on his company’s earnings call.

The uncertainty, however, prevented car makers from giving analysts definite answers on what they would do to mitigate the tariffs and protect profits that are already under threat from a slumping Chinese market share and the costs of shifting to electric.

As Mercedes’ Källenius put it: “In a situation this uncertain, we should refrain from taking too drastic of an action too soon.”

Jeep has reinvented the Compass for its third generation with a bold new look, a more upmarket cabin and the option of having one as an electric car for the first time.

With 2.5 million units sold worldwide since it was launched in 2006, the Compass is one of Jeep’s most important and popular models. The company’s Europe boss, Fabio Catone, said this latest generation will be “a key driver for Jeep growth” – building on the success of the smaller Avenger, which played a big role in the brand trebling its UK sales last year.

Available to order now and with deliveries due to begin in the autumn, the new Compass will be crucial in helping Jeep to claim a share of Europe’s popular C-SUV segment, which now accounts for around a quarter of all car sales in the region and is expected to be 90% electrified by the end of 2026.

The new Compass is based on the same STLA Medium architecture as the latest Vauxhall Grandland, Citroën C5 Aircross and Peugeot 3008. But it has been engineered to offer superior off-roading capability, claims Jeep, to position it as “the most capable” car in its class.

To that end, it has gained a suspension lift over its Stellantis platform-mates to give it up to 200mm of ground clearance and a maximum wading depth of 470mm. It also has shortened overhangs at each end, giving an approach angle of 20deg, a breakover angle of 15deg and a departure angle of 26deg. All variants get a suite of drive modes for different types of terrain, controllable by a chunky red dial on the centre console.

At 4548mm long, the Compass is among the shorter cars to use this platform, but it is 150mm longer than the old car. Its 2795mm wheelbase is a significant 159mm longer, which is said to result in an extra 55mm of leg room in each row.

The third-generation Compass bears little resemblance to its forebear, instead taking influence from the smaller Avenger, with a few subtle nods to Jeep’s heritage.

Its design was a collaborative effort across various global studios but was led by Jeep’s team in Turin.

“Turin is one of those cities that exemplifies the European lifestyle, and European cities are almost like urban jungles – the way people park and run over stuff – so what works in the woods also works in the city,” Stellantis chief design officer Ralph Gilles told Autocar.

“It’s not often we get to redo an icon like the Compass,” he added, emphasising the need to ensure Jeep’s mid-sized SUV stands out in a crowded segment. “When we came out years ago, we were the only game in town – there weren’t that many compact SUVs – and of course a lot of people have come into the scene and emulated us.”

With that in mind, Gilles’s brief to Compass designer Daniele Calonaci was to “make it rugged, make it more bold but, at the same time, detoxify”.

So the new Compass doesn’t feature any chrome – for ecological reasons and “to clean it up a little” – and it is overall a chunkier and more minimalistic proposition than before.

The design also features a new face – “one of the most intimidating parts of doing a new Jeep”, said Gilles – with the seven slots reimagined as a wraparound panel.

The exterior overhaul is matched by a dramatically different cabin with a 10.0in digital gauge cluster, a 16.0in touchscreen and an array of touch controls. The aim is for the Compass to serve as a more direct rival to the Kia Sportage and Hyundai Tucson.

“State-of-the-art technology will be standard on all models,” said Catone, “with features usually found in premium and upper segments.”

The new Compass will be the first Jeep offered with the choice of hybrid, plug-in hybrid and pure-electric powertrains. Catone said this ensures it is “capable of meeting 90% of segment demand” in Europe.

Both of the combustion-powered variants are front-driven. There’s a petrol mild-hybrid model with 143bhp and a 1.6-litre plugin hybrid with 192bhp and a 21kWh battery that will enable around 53 miles of engine-off running.

The electric Compass is available with either a 211bhp or 229bhp motor on the front axle, giving 311 miles of range from a 73kWh battery or up to 404 miles with a 96kWh pack.

At the top of the line-up is the all-electric 4xe, the only Compass with fourwheel drive from launch. It is equipped with a second, 177bhp electric motor on the rear axle that takes total power to 370bhp, making this Europe’s most powerful STLA-based car yet.

More significantly, this new motor – bespoke to Jeep – puts out 170lb ft of torque and runs through a 14:1 reducer, which means up to 2380lb ft is available at the rear, enabling the Compass 4xe to pull itself up a 20% incline even if there’s no traction at the front wheels.

In keeping with the 4xe’s more extreme billing, it has a 10mm suspension lift to boost ground clearance and give 31deg departure, 16deg breakover and 27deg approach angles.

The Compass First Edition will be priced at £35,700 in mild-hybrid form and £39,200 as a EV. PHEV pricing will be revealed later.

Q&A: Ralph Gilles, chief design officer, Stellantis

Is it a challenge to adapt modular, road-focused group architectures to Jeep’s needs?

“The good news is that everybody realises how important Jeep is to Stellantis and [the architectures] give us quite a bit of leeway. We negotiated a lot of leeway ourselves – for the largest wheel possible, and there was some overhang to be reduced. So it was foreseen with that ability. We were able to really protect that platform for several future products.”

Do you feel as though Jeep has lost a unique selling point as other brands start to trade on utilitarian ‘design for purpose’?

“There’s only one at the end of the day. I know that’s our tagline, but we really do believe that. When you’re Jeep, you have that confi dence that people are going to get exactly what they want out of it. We found the sweet spot in giving the right image, the right robustness.”

You have 80 years of heritage. As everyone is doing retro, why not lean on that in your designs more?

“It’s been done. We don’t need to do that. I’m actually proud of the direction this has taken, which is much more futuristic and timeless. As modern as it’s gone with the design, it has a beautiful understatedness to it, which I think makes it last and broadens its appeal.”