New York: Sales momentum is fading for Germany’s biggest luxury automakers in the US just as President Donald Trump threatens trade actions that could make their cars costlier.

BMW AG’s namesake brand outsold Daimler AG’s Mercedes-Benz for the first time this year, eking out a 1% gain in March. The increase, driven by the 5-Series sedan, was BMW’s smallest gain in five months. Mercedes deliveries slipped 2.4% as demand for its top car, the C Class, plunged.

Trump threatened to tax German-made cars sold in the US in a stump speech near Pittsburgh last month, escalating a spat with the European Union over steel and aluminium tariffs. The barbs keep coming despite German automakers taking pains to showcase their US production footprint, with BMW inviting the president to its plant in South Carolina last year and Volkswagen AG expanding production in Tennessee.

“We’re all concerned that in a market that’s slowing, we’re looking at a significant price increase," said Marc Cohen, vice president of Priority 1 Automotive Group in Baltimore and a member of the American International Automobile Dealers Association. “It’s gotten enough talk that it’s on our radar screen."

Even after its slip up in March, Mercedes still led its arch rival by nearly 5,000 US vehicle sales at the end of the first quarter.

Shares in Daimler and BMW were flat in local trading in Frankfurt at 9:10am, with Daimler declining 3.2% this year compared with a 2.1% gain for BMW since the start of 2018.

Trump suggested last month that the US could introduce a 25% tax on cars from the EU. He said during a press conference with the Swedish prime minister that the US. “has been mistreated" and “taken advantage of by other countries." American companies face 10% levies on cars and parts going into Europe, while EU companies pay 2.5% to ship them here.

The US has since said it would initially shield a list of allies, including Europe, from steel and aluminium tariffs.

In Alabama, Daimler produces more of its sport utility vehicles than anywhere else globally and is in the midst of a $1.3 billion expansion. BMW’s biggest factory in the world is in Spartanburg, South Carolina, which makes X3, X4, X5 and X6 SUVs for customers in the US, Germany and elsewhere.

“We feel that our footprint puts us in a very positive, strong position," Bernhard Kuhnt, president of BMW of North America, said in an interview at the New York International Auto Show last week.

Volkswagen’s Audi, whose luxury SUVs drove a 7.4% sales gain in March, is more vulnerable to any tariffs on imported cars because it doesn’t have a plant in the US. Its top-selling Q5 SUV is made in Mexico.

Though it’s been spared from Trump’s ire, demand at Toyota Motor Corp.’s Lexus also slowed in March. Total sales slipped 3.2% as sedan deliveries fell 13%. Bloomberg

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