Volkswagen is working on back-up plans for how its passenger car brand could tackle U.S. tariffs on imports from Mexico, while BMW is preparing to absorb the cost, as the auto industry reels from U.S.

Continental AG will try to pass on the cost of tariffs imposed by US President Donald Trump to its customers, according to the German parts maker’s finance chief.

In a recent report by Reuters, the CEO of Volkswagen Passenger Cars (VLKAF,) Thomas Schäfer, noted that increasing production at its Chattanooga, Tennessee plant to comply with President Trump's tariff rules is not a realistic endeavor for the company.

This comes as BMW along with other European carmakers are bracing for impact from US President Donald Trump’s planned tariffs on vehicles imported to the US.