Car shoppers outracing Trump tariffs poised to lift auto sales
By David WelchBloomberg
Brittany Humphries and her husband Jon Bassford are what sales people at car dealerships might call motivated buyers. The couple, who live in suburban Maryland outside Washington, DC, moved swiftly to lock in purchases this year to avoid the risk of paying thousands of dollars more once Trump administration policies on electric vehicles and tariffs fully kick in.
The couple’s story presages a buying boom as people rush to get ahead of the 25% tariff hike on imported vehicles that President Donald Trump announced on March 26, which is set to go into effect on April 3.
By the end of February, Humphries, 38, had traded in her 2022 Hyundai Kona crossover for a new $44,000 Acura Integra compact and her 42-year-old husband swapped his Acura MDX SUV for a lease on a $72,000 all-electric ZDX SUV.
Those transactions helped power strong first-quarter new car sales ahead of White House moves to disrupt the auto industry’s status quo.
“We just don’t want to be part of Trump’s game,” Humphries said.
The promised tariffs could jack up sticker prices once current inventories are depleted.
The first indication of a wider upswell in demand will come Tuesday, when major automakers such as General Motors Co. and Toyota Motor Corp. release new car sales data for the latest quarter. Tesla Inc. is expected to detail its global delivery numbers for the period on April 2.
Trump told reporters at a White House briefing on Friday that Americans shouldn’t rush out to buy cars ahead of the tariffs. But that doesn’t appear to be deterring motivated buyers.
“Savvy consumers are likely attempting to get ahead of future uncertainty surrounding auto pricing levels by taking advantage of March deals,” Chris Hopson, principal analyst at S&P Global Mobility, said in a statement. “Downside risks to the auto demand and production environment abound as consumers face potential higher auto prices as a result of expected tariffs.”
Import models – including those shipped from Canada and Mexico – make up about half of overall US sales. And many vehicles made in the US use a lot of imported parts. But it’s unclear exactly how much of a levy will be charged on specific vehicles and also how much of that extra cost – which is estimated to be as much as $12,000 for some models – will be born by consumers. The burden from previous tariff hikes and Covid-era supply chain disruptions was spread out among automakers, parts suppliers and car buyers over a period of years.
Cars already are more expensive than just a few years ago, giving pause even to some affluent buyers. Average new vehicle transaction prices hit $47,373 in February, according to car-shopping website Edmunds. Fear that prices can only go up with Trump’s latest tariffs is driving more people to move up their timeline for buying a new car, said Sam Fiorani, vice president of global vehicle forecasting at market research firm AutoForecast Solutions.
“The idea that cars might be more expensive in April has been all over the news,” he said.
A similar trend boosted car sales in the final quarter of 2024 as buyers rushed to sign paperwork for electric vehicles eligible for tax credits Trump has started to curb. That helped automakers end 2024 on a bullish note, with sales up 2.2% to 15.9 million vehicles for the year, marking the highest level since 2019, according to Wards Intelligence.
Edmunds projects first quarter sales will continue that upward trend, rising 1% to 3.8 million vehicles – the strongest start to the year since 2021. That number likely reflects some sales pulled forward by trade policy concerns, but also reflects healthy overall demand and supply in the market, according to Jessica Caldwell, an analyst at Edmunds. Price hikes and inventory disruptions tied to trade policy may start to weigh on auto sales beginning in April, she said.
“If you’re looking to buy a car in the next, I’d say, month, it wouldn’t be a bad idea to get a car as soon as possible,” Caldwell said in a Bloomberg TV interview.
Most major automakers sell vehicles sourced from multiple countries, with some brands more dependent on foreign-made models than others. Many of the cheapest vehicles are imported, something that could soon put many cars out of reach for entry-level buyers.
Faith Johnson, a 30-year-old dental assistant living in metro Detroit, has been looking to buy a new car because her current vehicle, a used Ford Explorer, is having engine trouble even after $5,000 in repairs. She’s been saving for a down payment on a new car since November, and has about $2,000 in cash saved up so far.
“Things are just super expensive,” said Johnson. “Now you have to come up with even more money because of the tariffs? That is insane.”
Researcher Cox Automotive projects sales growth to continue into the first three months of 2025, with a seasonally-adjusted annualized sales rate of 15.8 million vehicles. Prior to Trump’s tariff announcement, Cox expected 16.3 million vehicles would be sold for the full year. But that may drop once tariffs are imposed.
“It will be a squandered opportunity as we were poised for continuing growth” this year, Jonathan Smoke, Cox Automotive chief economist, said in a March 26 webcast. “Our quarterly survey of dealer sentiment showed positive momentum at the end of 2024.”