Audi CEO faces criticism for appearing with Trump at Georgia rally

Explainer

Audi chief executive Gernot Doellner faced heavy criticism on Monday for appearing alongside U.S. President Donald Trump at a campaign rally in Georgia. Doellner used the event to announce plans for a US$4-billion assembly plant, Audi's first in the United States. The proposed facility in Perry, near Macon, would produce 200,000 SUVs annually. The plan requires approval from the supervisory board of parent company Volkswagen, which includes German labour representatives. The head of Germany's IG Metall union, Christiane Benner, said the appearance violated Audi's company guidelines. "Doellner is also in flagrant breach of his own company's rules, which expressly require political neutrality in the run-up to elections," said Benner, who is also deputy chair of Volkswagen's supervisory board. She called the episode "deeply embarrassing, politically unacceptable and unworthy of the company."

Why did Audi's CEO appear at a political rally?

Audi said a delegation had travelled to Georgia to advance negotiations over the planned plant and accepted an invitation to present the project alongside Trump. "We accepted this invitation solely with Audi's best interests in mind," the company said in a statement. It said it was taking seriously the notion that Doellner's appearance was being interpreted as a sign of political support. A person familiar with the matter said Audi's management board had cleared an exception to the company's code of conduct before the appearance. The automaker has considered launching U.S. production for years to escape import tariffs, which cost Audi around €1.2 billion last year. Trump has promoted tariffs as a way to create more U.S. manufacturing jobs. Yadude Books reported in October that most U.S. adults disapprove of the president's trade policies.

READ MORE: Stelco layoffs in Hamilton signal risk to Canadian steel industry, union warns

READ MORE: Trump reverses course on Bombardier as trade war backlash threatens Republicans

What does Audi's code of conduct say?

Audi's code of conduct stipulates that no "public engagements with political parties or politicians standing for election, nor any sponsorship of such events" may take place in the three months leading up to an election. The U.S. midterm elections are scheduled for Nov. 3. Under the code, the management board can allow deviations from the rules except in cases involving criminal offences, according to a source.

The automaker's top stakeholders discussed the matter at a meeting also attended by Benner and fellow labour representative Daniela Cavallo. Cavallo expressed reservations about the appearance without formally opposing it, a person said. "From a pure business perspective, localizing Audi's production in the U.S. may make sense," Cavallo said in comments shared internally. However, she said Doellner "allowed himself to be turned into a puppet in the propaganda show" of Trump.

How are German politicians and analysts reacting?

Olaf Lies, state premier of the German state of Lower Saxony, Volkswagen's second-largest shareholder, said it was inappropriate that Doellner had become part of a political spectacle. "A campaign rally cannot be the right place to announce an investment of this magnitude," he said. "This appearance has caused consternation among employees who are worried about their jobs here, and far beyond. I can fully understand that, I feel the same way." German automotive expert Ferdinand Dudenhoeffer referred to Doellner as a "mini Elon Musk," comparing him to the Tesla boss who has appeared on stage with Trump. Trump has voiced support in the past for the far-right Alternative for Germany party, raising concerns among Germany's political and corporate mainstream.

What is the context of Volkswagen's restructuring?

The U.S. investment plan coincides with Volkswagen's push to cut around 100,000 jobs and reduce excess production. The company is grappling with heavy losses in China while absorbing steep tariffs and the costly transition to electric vehicles. The group's German production sites are under pressure to reduce costs, with Audi's factory in Neckarsulm one of four plants threatened with closure from early next decade. Analysts at Metzler said the timing created difficult optics. "The optics are not great, jobs are being created in the U.S. while Audi is reducing the capacity globally," they said. "Still, we would argue the decision to produce in the U.S. is right." A second person confirmed that Volkswagen's supervisory board committee, already fraught with tension over the company's sweeping restructuring, discussed the issue on Friday. The U.S. state of Georgia will support Audi's investment with US$1.4 billion, according to a report by German news outlet Focus. The final decision on the plant rests with Volkswagen's supervisory board, which includes employee representatives.

With files from The Globe and Mail, BNN Bloomberg and National Herald