Cox Automotive Forecasts a large impact on prices and a more moderate impact on sales
- Tariffs would add +$3,000 even to the cost of a car built in the United States since automakers depend on many foreign components.
- Tariffs would add $6,000 on average to the prices of cars made in Mexico or Canada
- U.S. factories would produce 20,000 fewer cars per week, or about 30 percent less than usual
- Cox Automotive 2025 Sales range is 15.6 - 16.3M, with the baseline being 15.6 (include some tariffs for some countries), meaning a -1.88% sales reduction at baseline, and 2.5% upper range.
Assessment: Since the average transaction price in the US is ~$48,000. It means there would be a minimum 6.25% increase in auto prices produced in the US, and a 12.5% increase for the ones produced outside. (meaning about half the tariffs will be passed to consumers)
@Aron I think it would also be prudent to include in the scenarios reduced sales due to these factors: 1- fall in production in US-produced models as Cox is forecasting because of supply chain disruptions, 2- lower-income consumers are not able to absorb higher prices without any decrease in demand (is not 2021/2022 boom economy anymore, much less with current uncertainty that impact big ticket items more), and 3- substitution effects from imported autos to US produced autos because the increase in prices will be lower.
Cox baseline is a -1.88% reduction in the latest outlook, but I think VW could be a bit more than this, at least in the economic segments. Cox also said this includes some tariffs for some countries, so it could be more pronounced than this with a full 25% on everything, probably worth exploring in worse scenarios.
https://www.nytimes.com/live/2025/03/26/business/trump-tariffs-auto-cars