Audi defends decision to stand by Trump on $4 billion US factory in Georgia

By Bo Erickson, David Shepardson and Rachel More

PERRY, Georgia/BERLIN, Oct 25 (Reuters) - The head of German automaker Audi defended on Sunday the company's planned $4 billion investment in a new US plant, announced by President Donald Trump as he campaigns for the November midterm elections.

Audi Chief Executive Gernot Doellner stood alongside Trump at a rally in Perry, near Macon in central Georgia on Saturday, as the US president said Audi, part of the Volkswagen Group, planned to build an assembly plant in Georgia that will produce 200,000 SUVs annually.

"This decision was preceded by many months of careful planning and intense negotiations," Doellner told reporters on Sunday. "If the American president invites you, you accept the invitation. That is what respect for the office and for the country in which we invest demands."

A final decision on the investment will have to be taken by Volkswagen's supervisory board for it to go ahead.

Georgia has competitive election races for the US Senate and its governor and Trump is eager to make the case that his auto tariffs are helping the US economy and boosting US manufacture.

In Germany, the tariffs have added to the pressures on European industry and tension between Volkswagen management and workers, who face job cuts and possible plant closures.

Trump's tariffs on autos, steel, aluminum and ​parts cost Audi around €1.2 billion ($1.4 billion) last year as it imports all its vehicles for the US market from Europe or Mexico, Audi has said.

Critics of the tariffs say they have also been damaging in the US where they have increased vehicle prices and delayed some automaker investments.

A spokesperson for Germany's IG Metall union said the decision by Doellner to extend a hand to Trump during the election was "hard to understand".

"Trump has never failed to make it clear what he is after: he wants to weaken our domestic economy, particularly the automotive sector," the spokesperson said.

Christiane Benner, head of the IG Metall union and Volkswagen's deputy supervisory board chair, said it was "right and necessary" to improve the company's position on the US market with a new plant. "However, firm prospects for workers at all sites, particularly those here in Germany, must be clearly defined and set out," she said.

Doellner declined to give full details on the investment deal with the US, including whether it involves tariff relief for the company.

AN OPPORTUNITY IF GERMAN WORKERS BENEFIT

Olaf Lies, state premier of the German state of Lower Saxony, Volkswagen's second-largest shareholder, said that expanded production in the US was an opportunity provided German workers also benefit.

"Growth in America must secure jobs and value creation here and must not displace them," he said.

Audi said the investment will create approximately 4,500 jobs. Construction is scheduled to begin next year, with production starting in the early 2030s, Audi said.

The plant is expected to assemble the Audi Q7, Q8 and Q9 SUVs, a US official told Reuters.

Audi also plans to build 25,000 vehicles a year in neighboring South Carolina, the official said. Some of the vehicles, now built in Europe, would be exported, the official added.

Those vehicles will be assembled at a $2 billion plant of VW's off-road brand Scout Motors that is under construction in Blythewood, near the state capital, Columbia, the official said.

"We regard the region as a key market for profitable growth," Volkswagen CEO Oliver Blume said. "A potential Audi plant in the US would create further conditions for this."

A gold Audi with manufacturer licence plates was parked outside Trump's rally on Saturday.

(Reporting by Bo Erickson in Perry and David Shepardson in Washington; Additional reporting by Christoph Steitz and Rachel More; Editing by Nia Williams, Rod Nickel, David Goodman and Barbara Lewis)