Automakers no longer have time to deal with rates – Jalopnik

Here is a news flash for you: prices almost always rise. In the car industry they go up towards the end of the year, when car manufacturers roll out new and updated models and have an excuse to lift stickers on the fresh sheet metal. This maneuver is of course often compensated by good deals from the previous model year, while dealers try to move the inventory of their plots. This year a wildcard was thrown into the mix, in the form of 15 percent rates for vehicles imported from Japan and Europe (those levies are currently higher, and it is It seems that some negotiations with the Europeans can keep them there for a while).

Marketplace covered the price situation and offered an important collection meal: Automakers no longer have time to deal with rates. The clock ticks throughout the year, and once cleaning up the end of the year is completed, the Bel Tol goes for both car companies and consumers. The result is that new vehicles will probably become even more expensive, because car manufacturers cannot eat a rate-induced costs forever. For the record, the The average transaction price currently fluctuates just below $ 50,000 in the US, So the inevitable tariff account will not be fun. For a large part of 2025, the car industry is inclined to take a low profile here. Car manufacturers do not want to expose themselves to political attacks, and Many managers still recover from the first Trump administrationWhen the Chief Executive showed little compunction to chew the industry to achieve its goals.

That said, it will be impossible to hide for the tariff hit forever. In practice, most car manufacturers are companies that ultimately have to answer their shareholders, and the large car companies have already advised that their bottom lines will suffer this year, up to an amount of billions. Washington would like to think that the tariff income will continue to shot as a kind of increase in corporation tax that companies have been grown to accept. But bad news will eventually arrive, in the form of lower profit and falling stock prices, so the pain will have to be passed on to consumers.

The American market has had a bit of a sugar high lately because buyers have picked up cars prior to tariff -related price increases. S&P Global still predicts a respectable, if not spectacular, year for sale in 2025With nearly 16 million new vehicles. The concern is that the pace will fall from a cliff in 2026 while consumers are down. Perhaps everyone hopes that the price increases will remain somewhat opaque, because most consumers finance their purchases with new cars and 15 percent may not seem so bad as they will spread in five years. That would be likely if the average price we are already so high. The simplest maths suggests that in 2026 we could see slightly less than $ 60,000, when car manufacturers finally begin to pass on the tariff costs.

That will introduce new stress on monthly budgets, which are probably already fighting with an increase in stress because all kinds of other companies have to pass on their rate -related costs. You can easily see why the Trump administration wants lower interest rates in this area: consumers have to borrow money to keep floating; And they need lower loan costs to, among other things, compensate for their new car purchasing obligations. If people now bingen when car manufacturers absorb the tariff costs and keep the line when prizes, they are liable to postpone purchases in 2026.

The last time we had a large shock of the American system, it was the financial crisis of 2008. At the time, the credit collapsed and we took our car purchases with us. Price decreases were the order of the day. Rates turn that script to, and are doubtful that an expansion of the tax cuts of 2017 and even the interest rates are falling to almost zero levels would be sufficient to keep consumers in the game. As a reminder, it became so bad after the financial crisis that people held for years on new car purchases, and the typical duration of car ownership went more than ten years. That trend has never really reversedAdding a drag of the American sale that forced car manufacturers to lean in more expensive models.

We are, it seems, not for a happy ride, because the bills are finally due.