Car dealerships in the US are experiencing a significant increase in foot traffic as consumers rush to purchase new vehicles before the implementation of tariffs, which are expected to drive up prices. The looming 25% tariffs on all car imports to the US, as well as those made in the US with imported parts, will affect nearly every make and model, causing prices to spike.
What’s Happening
The tariffs are set to become a reality soon, and analysts estimate that they could add between $10,000 to $15,000 to the price of mid-range cars. This increase will not only affect imported cars but also those made in the US, as there is no such thing as an “All-American Car.” Every vehicle will be impacted, with both used and new car prices expected to rise.
Impact on the Auto Industry
Erin Keating, an analyst at Cox Automotive, predicts that after the initial surge in sales, the market will see a significant decline in auto sales over the next several months. Certain models may even be eliminated from the American market due to the increased costs. Keating notes that the industry has seen a similar scenario before, during the COVID pandemic, when supply constraints and skyrocketing costs led to a market downturn.
Why It Matters
The tariffs will have a significant impact on car makers and dealerships, with many expecting a strong first quarter. However, this may not be the case for Tesla Inc., which is set to report its deliveries for the quarter. Analysts expect the company to report its worst quarterly growth in years, with deliveries expected to be around 410,000, a mere 5% increase from the previous year.
Tariffs to Hurt Tesla
The tariffs are expected to hurt Tesla especially hard, with estimates suggesting that they could add up to $12,000 to the price of most current EV models. This, combined with the company’s recent decline in key markets, is expected to negatively impact Tesla’s performance.
Market Outlook
As the tariffs take effect, the auto industry is bracing for a significant impact. With prices expected to rise and sales expected to decline, it’s a challenging time for car makers and consumers alike. The full extent of the tariffs’ impact remains to be seen, but one thing is certain – the US auto industry is in for a wild ride.
Related News
- Japanese automakers are also expected to be heavily impacted by the tariffs, with some estimates suggesting a $29 billion tariff hit.
- Nissan, Mazda, and Subaru are among the most at-risk companies, according to analysts.
- The tariffs are expected to have far-reaching consequences for the global auto industry, with many companies already feeling the effects.