Havoc.’ ‘Debacle.’ Analysts See Rough Road Ahead for Autos With Tariffs

WASHINGTON–What’s known: should President Trump’s tariffs remain in place, new and used vehicle prices are going to get even higher. The unknown: Will members stop buying cars, move from new to used, or given how many buy cars according to payment, move to less-expensive models?

The tariffs also may create challenges for credit unions that serve some autoworkers.

All of those questions and more remain much in flux with analysts predicting  auto prices could rise by $5,000 to $10,000 per vehicle and wreak havoc on the market as the result of 25% import tariffs on vehicles and auto parts.  

As the CU Daily reports separately, however, Black Book believes automakers will spread out the incremental cost of tariffed vehicles across their entire showroom to retain relative vehicle transaction prices. Still, the company expects tariffs to push the average transaction price on vehicles to more than $50,000.

‘A Debacle’

“The tariffs are a debacle of epic proportions for the auto industry and U.S. consumers, as the concept of a U.S.-made car with all U.S. parts is a fairy tale fictional narrative,” Dan Ives and other Wedbush analysts said in a research note that was reported by the Wall Street Journal.

Bank of America analysts said in a note to their clients, “In our view, the price increases will drive demand destruction, particularly as affordability has been a challenge for all buyers,” CNN reported. 

After Trump announced tariffs, Stellantis, which owns the Jeep and Dodge brands, said it would idle its minivan plant in Windsor, Ontario, for two weeks and another Jeep facility in Toluca, Mexico, for the rest of April, the Journal reported, adding the tariffs are expected to affect about 900 U.S. employees at U.S. part-making facilities.

Other Cost Boosters

“While higher costs from auto tariffs are expected to directly raise vehicle prices, reciprocal tariffs could indirectly raise those costs and prices, the UBS analysts said,” the Journal stated. “The spate of new duties could also boost costs for U.S. consumers more generally, which would further weigh on auto demand, the analysts said.”

“There are nearly unlimited permutations of the knock-on effects,” the analysts said.

Electric vehicle makers that include Tesla and Rivian, which manufacture in the U.S., said they also expected the tariffs to effect the prices of their vehicles, as they use components produced overseas.

CUDaily