Luxury cars never get cheaper, but how do tariffs affect the car market?
Tariffs affect the market everywhere. The answer to your question depends heavily on the luxury car manufacturer you are asking.
Straight Arrow News
Since US President Donald Trump’s tariffs came into effect in April, automakers have absorbed additional costs. so far.
Car prices were now expected to be higher, car executives and analysts predicted. But that didn’t happen, but reflects other industries where businesses decided to eat additional costs rather than hand them over to consumers.
According to car shopping site Edmunds, the proposed retail price, or MSRP, of the average manufacturer of new vehicles in the US, rose less than 1% from mid-March to mid-August.
Automobile brands have only implemented small price increases when rolling out their model year lineup for the 2026 model year, so car manufacturers are reportedly restrained this fall. According to Cox Automotive, the car brands that line the historic average, which rose from last year’s increase, were charged at 3.3% on the average sticker price in August.
But now that much of Trump’s tariffs appear to be stuck, analysts and dealers said automakers are under pressure to raise prices.
GN General said it will face up to $5 billion in tariff-related costs this year, and Ford FN cited its total $3 billion hit. Automobile companies have several levers that can be pulled before they can be burdened with the additional costs, from being absorbed internally to being liable to the supplier and dealership.
The apocalypse between car executives that bind customers to customs related costs reflects the reality that after multi-year gradual expansion of new and used car prices after the pandemic, American consumers may not be able to spur a significant price rise into their stomachs. According to Cox Automotive, the average trading price has risen by about 30% since 2019 to $49,077.
Hyundai North American CEO Randy Parker said the South Korean automaker has maintained pricing to protect its customers from losing it to customers despite roughly $600 million in its revenues in the second quarter.
“Our priorities ensure that we are competitive through affordable prices,” Parker told Reuters this month.
According to an analysis by consultant and former GM executive Warren Brown, tariff-related costs reached approximately $2,300, an additional cost per vehicle in June, when applied to all domestic and imported vehicles.
Brown believes that automakers will start raising prices from the second half of the year to protect their revenues, despite these higher prices weakening demand and leading to an overall decline in U.S. vehicle sales.
Companies that gradually increase prices
Kevin Roberts, director of economic and market intelligence at online marketplace Cargurus, also predicts that automakers will gradually raise MSRP and focus more on more expensive models with higher profit margins.
Resisting price hikes allowed businesses to avoid blowbacks from Walmart WMT.N, Amazon.com AMZN.O, and Trump, who publicly criticized Walmart WMT.N, Amazon.com AMZN.O, and other companies that signaled plans to raise prices to offset prices.
The automaker hikes prices for certain models, including Ford’s Mexican-produced vehicles, the Subaru 7270.T model, and luxury brands such as the Porsche PSHG_P.DE and Aston Martin AML.L.
According to analysts and dealers, automakers are also subtly passing customs costs to consumers without a direct price increase. For example, destination fees, essentially shipping to dealers, rose 8.5% in the year 2025 model year to $1,507, and was discovered. This was a much more important jump than in the last decade.
Mike Manley, CEO of Automation AN.N, a large dealer chain, said in a July revenue call he hopes automakers will maintain competitive pricing for top models and implement minor adjustments across the portfolio over time.
Scott Kunes, chief operating officer of the Midwest dealer group, agrees, saying that the automaker doesn’t want to speed up prices and lose customers to competitors.
“There’s still a very competitive landscape and the market share is very large for these manufacturers,” he said. “It’s going to be very, very slow.”
Reported by Nora Eckart of Detroit. Edited by Mike Collius and Matthew Lewis
