Should You Buy a New Car Before Tariff Price Hikes This Summer?
The current tariff on imported cars stands at 15-25%, dependent on where manufacturing is based and where their parts are imported from, in addition to the pre-existing 2.5% base tariff. Even cars made in America are hit, since manufacturers still import several parts even if production is in the country. For example, nearly 80% of the vehicles Ford sells in the US are assembled in America, but it still imports about 10% of parts, resulting in high tariff burdens. Right now, car makers are essentially absorbing the cost of tariffs to maintain market share. However, manufacturers can't eat these costs indefinitely, as they are essentially paying the government from their profit margins.
Industry experts Cox Automotive predict that new car prices could rise between 4-8% by the end of the year, depending on the manufacturer's tariff liability. The 25% tariff on imported vehicles will apply to nearly 80% of vehicles priced under $30,000. Expect a price increase between $1,200-$5,000 on several models across manufacturers, based on the variety of ever-changing tariff factors. By that metric, the Toyota RAV4, which currently has a starting price of $29,550 could be between $1,182-$2,364 more expensive in the coming months. The average price of new cars is set to go well over $50,000.
The tariff impact isn't hitting everyone equally. The brands feeling the most pressure are those heavily reliant on imports from Mexico, Canada, and other countries.
Most Affected Manufacturers:
General Motors - Roughly 22% of U.S. sales are assembled in Canada and MexicoFord - Just under 15% of sales from Mexico, but with three major plants there exporting 90% of production to the U.S. Volkswagen Group - Over 43% of sales affected by tariffsNissan - Sources about 27% of its U.S. sales from Mexico, making it heavily vulnerableStellantis (Jeep, Dodge, RAM, Chrysler) - About 23% of sales sourced from Mexico; already halted production at Mexico/Canada plantsBMW - The Mexico plant produces the top-selling 3 Series, 2 Series Coupe, and M2, with nearly all output going to the U.S.
Moderately Affected:
Honda - Sources nearly 13% from MexicoHyundai - About 8% of sales are produced in MexicoToyota - Around 8% of sales are produced in Mexico
Least Affected:
Brands with significant U.S. manufacturing footprints are in a much better position. These include Toyota and Honda, which have large domestic production facilities and can avoid many of the tariff impacts on their most popular models.
All signs point to new car prices going up in the summer of 2025. Industry analysts suggest that the current price stability is temporary, as manufacturers run through existing inventory and absorb costs in the short term. Manufacturers typically make midyear price adjustments over the summer months, even without the looming threat of tariffs. With more price increases expected, we're likely approaching a tipping point, one of no return.
If you're in the market for a new car, the window for current pricing is closing soon. While prices will likely increase, the hope is that manufacturers will continue to offer incentives to move cars off lots. If you can wait, you might find better deals on domestically produced alternatives, though pricing on those will also see market correction.
If you have your eyes set on a particular model that is affected by tariffs, now might just be the best time to get a good deal on it.
Copyright 2025 The Arena Group, Inc. All Rights Reserved.
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