Friday, April 4, 2025

Tariff Rush: U.S. Auto Sales Surge as Buyers Race to Beat Price Hikes

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U.S. auto sales skyrocketed in March.

Consumers rushed to buy cars at current prices before the 25% auto tariff took effect on Wednesday.

Despite U.S. President Donald Trump’s attempts to pressure the Big Three Detroit automakers—General Motors, Ford, and Stellantis—not to raise prices despite the tariffs, consumers anticipated inevitable price hikes and proceeded with early purchases.

Purchasing Before Tariffs

The Wall Street Journal reported on Tuesday that Hyundai Motor’s U.S. new car sales surged 15% year-over-year in March, marking its best performance since entering the market.

While heavily reliant on production lines in Mexico and South Korea, Hyundai is expected to absorb some of the tariff impact as its large-scale factory in Georgia recently began operations.

Randy Parker, head of Hyundai North America, told reporters that he experienced one of the busiest weekends in 15 years as the company scrambled to mitigate the tariff impact.

Ford saw a 19% jump in the U.S. new car sales in March.

Among the Big Three, Ford is expected to be the least affected by the tariff impact, as it assembles about 80% of its new vehicles in the U.S.

Ford produces affordable models like the Maverick compact pickup truck and the Bronco Sport crossover at its Mexican plant.

General Motors reported a 17% increase in new car sales for the first quarter.

However, over 40% of GM’s new vehicles sold in the U.S. are produced in Mexico, Canada, and South Korea.

Last week, Trump announced a 25% tariff on all imported cars and major parts. Nearly 7 million new cars, accounting for almost half of the U.S. auto market, will be subject to these tariffs.

Tariffs on finished vehicles will begin on Thursday, while those on major auto parts like transmissions and engines will take effect within a month.

Trump claims the tariffs will revitalize the U.S. auto manufacturing industry.

However, auto executives and analysts warn that production costs per vehicle will rise by thousands of dollars, with consumers ultimately bearing this burden.

Tariffs Put Pressure on the Auto Market

According to JD Power, the tariffs have already begun to pressure the U.S. auto market, even before implementation.

Dealers are rapidly increasing their new car inventories to secure as many vehicles as possible before prices rise due to the tariffs. They aim to stockpile as many imported cars as possible before the tariffs take effect.

While high inventory typically leads to more discounts, the situation is currently different.

Automakers have reduced discount rates compared to a year ago.

JD Power analyzed that the anticipated price increases due to the tariffs are putting upward pressure on prices.

They also indicated that new car prices from 2019 to 2024 in the U.S. are expected to rise by about one-third, reaching the mid-$40,000 range.

In a recent analysis, Morgan Stanley expressed concerns that if Trump’s tariffs persist, new car prices could rise an additional 12%, pushing monthly payments from $750 to $840.

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