Volkswagen Group has confirmed it will maintain its plants in Mexico despite US President Donald Trump's threat to impose 25 per cent tariffs on trading partners Canada and Mexico, Europa Press reported. The German automaker plans to engage with the US administration to discuss the tariff issue but has no current plans to transfer its North American operations to the United States.

"We've maintained contacts with the US government in the past and will wait to take next steps. First, something concrete needs to be put on the table: between the United States and Europe is the European Commission. Once we have a new federal government (in Germany), we'll begin discussions when parameters are clear," Volkswagen CEO Oliver Blume said at the company's annual results presentation on March 11.

When questioned about facilities in Mexico and Canada, Volkswagen pointed out that the North American automotive industry is "vertically integrated" across the three countries. The group's finance director Arno Antlitz added that relocating automotive plants is not feasible on short notice: "You can't move a car plant and relocate it overnight or in a few weeks."

Regarding its Puebla facility in Mexico, Antlitz explained the company plans to move Golf production there to make space for more advanced electric models at its flagship Wolfsburg plant. "We will continue with growth. We have investments planned for the Tayron in Mexico. We also began expanding our battery factory in Ontario, Canada. These are major investments included in our 2025 investment planning for the United States," he stated.

The company has adjusted its battery production capacity in Canada, Valencia and Salzgitter due to lower demand for battery electric vehicles. Volkswagen also welcomed the European Union's postponement of CO2 emissions sanctions, with Blume noting the move provides "more room to manoeuvre in 2025 to avoid fines" which the company can reinvest in its business.

Last week, the Trump administration postponed 25 per cent tariffs on many imports from Mexico and Canada covered by the North American free trade agreement, including cars produced by US automakers, for a month. Still, the levies are set to come into effect on April 2.