Quick Takeaways
- Trade deal slashes tariffs, unlocking fresh growth for European and South American automakers.
- German and EU suppliers stand to gain from higher exports, production and investment flows.
the VDA EU-Mercosur trade agreement was welcomed by the German Association of the Automotive Industry as a major step toward strengthening international automotive trade. The deal is designed to drive growth, employment, and industrial competitiveness by opening new market access between Europe and key South American economies.
How the VDA EU-Mercosur Trade Agreement Supports Automakers
The VDA EU-Mercosur trade agreement significantly improves market conditions for vehicle and component manufacturers by reducing import duties that have long restricted trade flows between the two regions.
Key benefits for the automotive sector include:
These measures are expected to make vehicles and components more competitive while encouraging greater cross-border production and investment.
Production and Export Imbalance Highlights Growth Potential
In 2024, German carmakers built approximately 524,000 passenger vehicles in Brazil and Argentina, reflecting the strategic importance of Mercosur manufacturing bases. During the same period, only 25,700 cars were shipped from Germany to all Mercosur markets, showing a large gap between local production and direct exports.
This imbalance underlines how much room exists for expansion once trade barriers are reduced, enabling European manufacturers to better serve customers in South America from their home plants.
Impact on Europe’s Automotive Value Chain
Germany’s automotive industry is deeply embedded within a wider European supply network. Rising demand from Mercosur will not only benefit German vehicle producers but also stimulate activity across the entire regional ecosystem.
This includes:
Stronger trade ties are therefore expected to translate into higher output, increased investment, and more jobs throughout Europe’s automotive value chain, reinforcing the continent’s role in global vehicle manufacturing.
How the VDA EU-Mercosur Trade Agreement Supports Automakers
The VDA EU-Mercosur trade agreement significantly improves market conditions for vehicle and component manufacturers by reducing import duties that have long restricted trade flows between the two regions.
Key benefits for the automotive sector include:
- Import tariffs on auto parts in Mercosur countries falling from 14–18 percent
- Passenger car duties being lowered from levels as high as 35 percent
- Easier export access for both European and South American manufacturers
These measures are expected to make vehicles and components more competitive while encouraging greater cross-border production and investment.
Production and Export Imbalance Highlights Growth Potential
In 2024, German carmakers built approximately 524,000 passenger vehicles in Brazil and Argentina, reflecting the strategic importance of Mercosur manufacturing bases. During the same period, only 25,700 cars were shipped from Germany to all Mercosur markets, showing a large gap between local production and direct exports.
This imbalance underlines how much room exists for expansion once trade barriers are reduced, enabling European manufacturers to better serve customers in South America from their home plants.
Impact on Europe’s Automotive Value Chain
Germany’s automotive industry is deeply embedded within a wider European supply network. Rising demand from Mercosur will not only benefit German vehicle producers but also stimulate activity across the entire regional ecosystem.
This includes:
- Component suppliers across multiple EU countries
- Logistics and distribution providers supporting vehicle exports
- Manufacturing sites linked through cross-border production
Stronger trade ties are therefore expected to translate into higher output, increased investment, and more jobs throughout Europe’s automotive value chain, reinforcing the continent’s role in global vehicle manufacturing.
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