The ‘German badge tax’ describes the significant price premium commanded by legacy German luxury automakers relative to their baseline manufacturing costs. As open markets introduce disruptive competitors offering advanced technology at a fraction of the price, this prestige markup is increasingly exposed as an economic illusion.
M Flavio de J M from Mexico posted on LinkedIn recently and it his opinion and facts that do give food for thought. However, Ivan Jovanovic’s (from Germany) comment is short and to the point – in opposition. There are various other viewpoints given.
“The German ‘Badge Tax’: How Open Markets Exposed the Illusion of Legacy Luxury
One Mercedes-AMG G 63 costs $4 899 900 MXN in Mexico. For the same money you can buy three Jetour G700 Gaia – 892 horsepower, 1 135 Nm, 0–100 in 4.8s, air suspension, three rows, every screen you can name, it floats – with spare change.”
“That’s not a bargain. That’s a verdict. Even worse: German cars enter Mexico duty-free (EU-Mexico FTA). The Jetour pays a 50% import tariff – the WTO ceiling. And it still undercuts the G63 by more than three to one. The protected car loses. The taxed car wins.”
“So what exactly is the extra $3.4 million pesos buying? A louder exhaust. A stiffer ride. A badge on the grille. Lower MPG, 3 year, versus 10 year warranty. The engineering gap isn’t just closed. It’s reversed.”
“The badge is all that’s left.”
“Volkswagen’s own leaked internal documents say the quiet part out loud. Emden builds a car for €4 850. Tianjin builds it for €1 078. German labour: €74/hour. Chinese labour: €12/hour. 800 fewer annual working hours in Germany. Energy at 2.5x the Chinese cost. VW is now weighing four plant closures and 100 000 job cuts. Its own conclusion: Survival requires austerity.”
“Meanwhile, in China – the market that once delivered a third of German profits. Mercedes sold 1 153 electric CLAs in the first half of 2026. Xiaomi sold 80 000 SU7s. The five German pillars – VW, Audi, BMW, Mercedes, Porsche – now hold 1.6% of China’s EV market. Their combined EV sales there fell 55% in Q1 2026. BMWs dropped nearly 65%.”
“They’re losing because they’re selling yesterday’s engineering at tomorrow’s prices on a four-year cycle, while the competition refreshes every eighteen months.”
“The German answer has been to build walls. The EU’s Industrial Accelerator Act wants ‘Made in EU’ content and prior approval on foreign investment. Walls don’t fix cost structures. Walls buy time. Time is the one thing Germany has already spent – profitably, for a while. The priorities were clear. The consequences have arrived.”
The lesson isn’t just about cars. One doesn’t get strong by locking the door. One gets strong by becoming the one to beat. The Chinese EV industry got here through twenty years of brutal domestic competition. The German industry got here through a century of engineering excellence that quietly became decades of complacency – protected by trade rules that made competing optional.”
“The badge still works. Someone will still pay $4.9 million pesos for the noise. But the badge no longer signals superiority. It signals something else: A willingness to pay a premium for a product that no longer justifies one.”
“Paying a 230% markup for a badge isn’t prestige. It’s just foolishness.”
Ivan Jovanovic’s comment in response
“3 Jetour after 3 years will be worth 20% of original value. G63 AMG have great chance to have higher value over time if some special edition ones. Don’t fall into the trap of cheap please. It is simply not worth comparison as those cars target different users. None of them would buy other.”
Meanwhile in South Africa
The Jetour T-Series payload saga is back in the spotlight after local testing produced conflicting results for one of the range’s models.
While testing at the Clayville Testing Centre in Gauteng supported the revised 475kg payload rating for four of the five T-Series models tested, the midrange T2 2.0T XPlora produced a discrepancy. Jetour says it exceeded the 475kg rating by 4kg, while official weighbridge results seen by the Automobile Association (AA) indicate that it fell 20kg short. Jetour has, however, put the discrepancy down to fuel levels distorting the tested tare weight used for the calculation.
The test results come after Jetour revised the approved payload ratings for its T1 and T2 models from 300kg to 475kg, following consultations with its Chinese head office and the National Regulator for Compulsory Specifications (NRCS).
So what is the problem?
The controversy kicked off earlier this year after the Jetour T1 and T2 models, which were launched in late 2025, came under fire for their 300kg payload ratings, which were uncharacteristically low for an ‘adventure’ SUV.
While the T-Series models surged up the sales charts to become one of the country’s most popular midsize SUV line-ups, with the Jetour T2 also winning the 2026 South African Car of the Year title, the payload remained a concern for families wanting to load up and hit the open road.
After all, simply having five lightweight passengers would be enough to push the vehicle beyond its permitted payload, and that’s before any luggage has been added.
