COST INCREASES
Cox Automotive, an automotive services provider, on Wednesday forecast that if there are no tariff carve-outs for the auto industry on imports from Mexico and Canada, US$3,000 would be added to the cost of a US-made vehicle and US$6,000 on a vehicle made in Canada or Mexico.
If tariffs go through, by mid-April, Cox expects disruption to “virtually all” North American vehicle production, leading to 20,000 fewer vehicles produced per day, or about a 30 per cent hit to production.
“Over the longer term, we expect sales to fall, new and used prices to increase, and some models to be eliminated if those tariffs persist, and we’ve yet to hear details about tariffs on the European Union, Japan and South Korea,” Cox Chief Economist Jonathan Smoke said. “Bottom line, lower production, tighter supply, and higher prices are around the corner, reminiscent of 2021.”
Incentives are already starting to decline, Cox noted. The new vehicle market is now looking at a return of inflation, Cox Senior Economist Charlie Chesbrough said on the firm’s forecast call. The average transaction price for a new vehicle is now US$48,039, which is down from the peak of about US$50,000 in December 2022 but up 1 per cent from last year.
“Given the impact of tariffs, prices are likely to start rising at a much faster rate,” Chesbrough said.
