If you want to buy a new car, then its price is going to increase. The reason for this is the President. Donald Trump has new tariffs that have been imposed on vehicles and their parts. Because of these charges, the new vehicle could cost about $2,000 or even more.
The report suggests that automakers will recover most of their costs, around 80%, from customers. An expert at AlixPartners said that "these charges create a huge cost wall," which will mostly be passed on to customers.
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Automobile companies are expected to lose $30 billion this year. A large part of this loss they will pass on to the customers. AlixPartners, a consulting firm in suburban Detroit, said some import models could disappear completely from the market, especially those with higher tariffs. The company's "best guess" is that the price of a typical cart will increase by at least $1,760. At the same time, the price of foreign-made luxury models can increase by thousands of dollars.
Even cars that are made in the US will be affected. This is because they also have many parts coming from abroad, and they will now be charged, especially the parts coming from China. The companies will not increase the cost uniformly on all vehicles. "Low duty will be imposed on entry-level and mainstream cars," as companies do not want to push out cheaper customers from the market.
At the same time, customers of "higher-end brands" will be charged more as they are less price sensitive. Some companies may even discontinue the model; For example, Nissan is shutting down its Versa by the end of this year.
Battery-electric vehicles (EVs) are particularly vulnerable. Many EV models like the Audi Q5 e-tron and Mercedes EQE sedan come from outside and will be charged heavily. Even models like the Tesla Model Y made in the US rely on batteries or raw materials from China.
Further complicating matters, a federal budget bill from the Trump administration could eliminate federal tax credits of up to $7,500. AlixPartners had earlier projected 31% of the US market for EVs in 2023, now it is expected to be close to 17%. With this, customers can switch to more affordable vehicles with petrol or diesel.
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There is a general opinion that the sale of new vehicles will come down due to the new duty. Cox Automotive estimated last month that demand could fall to 15 million, and even go up to 14 million if there is a recession. AlixPartners' Wakefield expects the nearly 1 million drop in the U.S. market to last three years, and then improve.
But for that to happen, the Trump administration will have to strike new trade deals with key partners as promised. So far, they have only had one major agreement with the United Kingdom. One good thing could be that the White House could reduce its tariffs from 25% to an average of closer to 7.5%.
Source: Autoblog
