Latest news with #MarkSchirmer
Al Jazeera
13-08-2025
- Automotive
- Al Jazeera
US car sales slow after tariff-driven buying surge ends
After a wave of rushed buying, driven by looming tariffs, US car sales have started to slow, weighing on carmakers. New car sales fell by 300,000 in June from 15.6 million to 15.3 million, according to data released by Cox Automotive last month. 'Now we've got sales slowing because [the pre-tariff buying] surge pretty much pulled ahead a lot of people that might have been in the market this year, who wanted to buy before tariffs hit,' Mark Schirmer, director of industry insights at Cox Automotive, told Al Jazeera. This will only get harder for carmakers, dealerships and shoppers down the road. 'Price rises together with demand destruction,' Sina Golara, assistant professor of supply chain management at Georgia State's Robinson College of Business, told Al Jazeera. 'If consumers don't have the resilience to pay for those higher prices, they'll take a step back.' United States President Donald Trump's erratic approach to tariffs, putting some in place and then taking them away, has made it difficult for businesses to plan. In April, car companies, including Stellantis, Ford and Volvo, suspended financial guidance as a result of the uncertainty. Last month Volvo also said that tariffs will cost it $1.2bn in the second quarter. Ford then announced it expects a reduced annual profits to $3bn after taking an $800m hit from tariffs in the second quarter. GM announced that it expects a $5bn hit, and Toyota said it expects $9.5bn in tariff-driven blows to profits for the year. In May, Ford also announced it would have to raise prices on some of its cars made in Mexico, including the Mustang Mach-E electric SUV, Maverick pick-up truck and Bronco Sport, in some cases by as much as $2,000, the Reuters news agency reported. Those cars began to reach lots last month. As a result, consumers are overwhelmingly opting for used cars that are not subject to tariffs, including foreign-made ones, as they are already on US roads. Used car sales are up 2.3 percent from this time last year, according to Used Car Index report, an auto industry insight platform by Edmunds. In part, this is because of the limited supply of used cars. Edmunds's report says that buyers, and sellers looking to upgrade but need the money from sale of a current car, are hesitant about undertaking expenses amid economic uncertainty. The bigger impact of both those trends is of inventory piling up. On average, dealerships have 82 days worth of cars on the lot, a roughly 14 percent increase between May and June. An expensive escalation Cox forecasts prices could rise anywhere between 4 to 8 percent over the next six months as a result of the tariffs. The group expects new car sales of 13 million to 13.3 million this year. 'Tariffs will be inflationary on both the new and used vehicle market,' Schirmer said, adding, the main challenge right now is the unsold inventory that's piling up. Analysts believe that prices will continue to rise amid Trump's tariffs, especially as companies try to move supply chains to the US, as demanded by Trump, an effort that is years in the making. 'The tariff 'relief' is like putting a band-aid on a bullet wound with US car companies now dealing with the repercussions moving forward as this Twilight Zone situation will change the paradigm for the US auto industry for years to come,' Dan Ives, analyst at Wedbush Securities, said in a note provided to Al Jazeera. In the meantime, the cost to import a car is expected to increase by $1,000 this year to $5,700, according to Cox Automotive. 'The US imports a little less than half of the new vehicles sold, but dependence on imports varies substantially by segment. The most dependent segments are at the two ends of the price spectrum – the most affordable vehicles and luxury vehicles. Most of the vehicles priced under $30,000 would face added costs that would make them unaffordable,' Cox Automotive chief economist Jonathan Smoke said in a June conference call shared with Al Jazeera. EVs hit hard Trump's new tax legislation – signed into law last month and which cut the EV tax credit of up to $7,500 – has already led to a significant pullback specifically for the electric vehicle marketplace as demand for the products begins to fall. 'Our forecast had been for approximately 10 percent of new vehicle sales this year to be EV. We slightly lowered that to 9 percent,' Schirmer added. Volvo reported a 26 percent decline in sales for electric vehicles (12 percent overall). Ford EV sales tumbled by 31 percent. Rivian saw sales decline by 23 percent. Tesla saw a decline of 13.5 percent globally as CEO Elon Musk's political involvement hindered the brand's reputation. The cuts to the EV tax credit is expected to cost Tesla $1.2bn every year, JP Morgan forecast. 'Several dealers have also stated that these [EV tax credits] are the main drivers [for consumers]. So without those incentives, there would definitely be a significant hit through EV sales,' Golara added. General Motors has been the exception to the rule. The Michigan-based auto giant doubled its EV sales in recent months. Despite the dip in sales, Golora believes that the setback in the EV market is temporary. 'It's [the EV market] still compelling in the long run because many manufacturers have already reached a decision that this is where the industry is going,' Golara said. 'Investment [in EV production] doesn't look like a lost one. The payback period will be longer.' Manufacturing strains While US manufacturing ticked up overall in June, when it comes to motor vehicle and parts production, it is a different story. Production tumbled by 2.6 percent for the month as demand began to slow. US auto manufacturing employment is also down. According to the Bureau of Labor Statistics, employment in auto manufacturing in the United States has tumbled by 35.7 percent since this time last year and down 2.4 percent from this time last month. Al Jazeera reached out to the United Auto Workers for comment about the effect on car manufacturing jobs, but the organisation did not respond. 'Demand was not growing as fast as needed, and many manufacturers were caught by surprise. That's a problem, and it is kind of a longer-term, structural issue,' Golara said.
Al Jazeera
13-08-2025
- Automotive
- Al Jazeera
Automakers brace for profit hits in anticipation of tariff price hikes
After a wave of rushed buying, driven by looming tariffs, US car sales have started to slow, weighing on carmakers. New car sales fell by 300,000 in June from 15.6 million to 15.3 million, according to data released by Cox Automotive last month. 'Now we've got sales slowing because [the pre-tariff buying] surge pretty much pulled ahead a lot of people that might have been in the market this year, who wanted to buy before tariffs hit,' Mark Schirmer, director of industry insights at Cox Automotive, told Al Jazeera. This will only get harder for carmakers, dealerships and shoppers down the road. 'Price rises together with demand destruction,' Sina Golara, assistant professor of supply chain management at Georgia State's Robinson College of Business, told Al Jazeera. 'If consumers don't have the resilience to pay for those higher prices, they'll take a step back.' United States President Donald Trump's erratic approach to tariffs, putting some in place and then taking them away, has made it difficult for businesses to plan. In April, car companies, including Stellantis, Ford and Volvo, suspended financial guidance as a result of the uncertainty. Last month Volvo also said that tariffs will cost it $1.2bn in the second quarter. Ford then announced it expects a reduced annual profits to $3bn after taking an $800m hit from tariffs in the second quarter. GM announced that it expects a $5bn hit, and Toyota said it expects $9.5bn in tariff-driven blows to profits for the year. In May, Ford also announced it would have to raise prices on some of its cars made in Mexico, including the Mustang Mach-E electric SUV, Maverick pick-up truck and Bronco Sport, in some cases by as much as $2,000, the Reuters news agency reported. Those cars began to reach lots last month. As a result, consumers are overwhelmingly opting for used cars that are not subject to tariffs, including foreign-made ones, as they are already on US roads. Used car sales are up 2.3 percent from this time last year, according to Used Car Index report, an auto industry insight platform by Edmunds. In part, this is because of the limited supply of used cars. Edmunds's report says that buyers, and sellers looking to upgrade but need the money from sale of a current car, are hesitant about undertaking expenses amid economic uncertainty. The bigger impact of both those trends is of inventory piling up. On average, dealerships have 82 days worth of cars on the lot, a roughly 14 percent increase between May and June. An expensive escalation Cox forecasts prices could rise anywhere between 4 to 8 percent over the next six months as a result of the tariffs. The group expects new car sales of 13 million to 13.3 million this year. 'Tariffs will be inflationary on both the new and used vehicle market,' Schirmer said, adding, the main challenge right now is the unsold inventory that's piling up. Analysts believe that prices will continue to rise amid Trump's tariffs, especially as companies try to move supply chains to the US, as demanded by Trump, an effort that is years in the making. 'The tariff 'relief' is like putting a band-aid on a bullet wound with US car companies now dealing with the repercussions moving forward as this Twilight Zone situation will change the paradigm for the US auto industry for years to come,' Dan Ives, analyst at Wedbush Securities, said in a note provided to Al Jazeera. In the meantime, the cost to import a car is expected to increase by $1,000 this year to $5,700, according to Cox Automotive. 'The US imports a little less than half of the new vehicles sold, but dependence on imports varies substantially by segment. The most dependent segments are at the two ends of the price spectrum – the most affordable vehicles and luxury vehicles. Most of the vehicles priced under $30,000 would face added costs that would make them unaffordable,' Cox Automotive chief economist Jonathan Smoke said in a June conference call shared with Al Jazeera. EVs hit hard Trump's new tax legislation – signed into law last month and which cut the EV tax credit of up to $7,500 – has already led to a significant pullback specifically for the electric vehicle marketplace as demand for the products begins to fall. 'Our forecast had been for approximately 10 percent of new vehicle sales this year to be EV. We slightly lowered that to 9 percent,' Schirmer added. Volvo reported a 26 percent decline in sales for electric vehicles (12 percent overall). Ford EV sales tumbled by 31 percent. Rivian saw sales decline by 23 percent. Tesla saw a decline of 13.5 percent globally as CEO Elon Musk's political involvement hindered the brand's reputation. The cuts to the EV tax credit is expected to cost Tesla $1.2bn every year, JP Morgan forecast. 'Several dealers have also stated that these [EV tax credits] are the main drivers [for consumers]. So without those incentives, there would definitely be a significant hit through EV sales,' Golara added. General Motors has been the exception to the rule. The Michigan-based auto giant doubled its EV sales in recent months. Despite the dip in sales, Golora believes that the setback in the EV market is temporary. 'It's [the EV market] still compelling in the long run because many manufacturers have already reached a decision that this is where the industry is going,' Golara said. 'Investment [in EV production] doesn't look like a lost one. The payback period will be longer.' Manufacturing strains While US manufacturing ticked up overall in June, when it comes to motor vehicle and parts production, it is a different story. Production tumbled by 2.6 percent for the month as demand began to slow. US auto manufacturing employment is also down. According to the Bureau of Labor Statistics, employment in auto manufacturing in the United States has tumbled by 35.7 percent since this time last year and down 2.4 percent from this time last month. Al Jazeera reached out to the United Auto Workers for comment about the effect on car manufacturing jobs, but the organisation did not respond. 'Demand was not growing as fast as needed, and many manufacturers were caught by surprise. That's a problem, and it is kind of a longer-term, structural issue,' Golara said.
CNBC
12-06-2025
- Automotive
- CNBC
Planning to buy a new car? It may make sense to act now—before tariffs push prices higher
If you're shopping for a new car, you might want to act now before tariffs push prices higher. That's because sticker prices are still hovering near pre-tariff levels, in part because many models on dealer lots were built before the new rules took effect. "There's a lot of uncertainty, but retail prices are holding pretty steady," says Mark Schirmer, a spokesperson for Cox Automotive. In May, the average transaction price for a new vehicle was $48,799, virtually unchanged from April, according to Cox's data. "We're not quite seeing the full impact of the tariffs yet," says Joseph Yoon, consumer insights analyst at Edmunds. The automotive research firm's data shows monthly payments on new loans for both new and used vehicles rose slightly in May — an increase in line with typical month-to-month changes. As of June, the Trump administration has imposed a 25% tariff on imported vehicles and many foreign-made auto parts. The policy includes temporary exemptions for some components from USMCA countries, announced in April, but most imports still face added costs. These new auto tariffs come on top of metal import duties — including steel and aluminum tariffs as high as 50% — that are already driving up costs across the auto supply chain, even for vehicles assembled in the U.S. "There are significant tariffs on the auto industry right now," Schirmer says. "The reality is, tariffs are inflationary," and with those added costs, car prices will increase "unless something changes drastically in the near term." Instead of raising sticker prices, automakers have largely absorbed costs through scaled back rebates and financing deals since April, according to The Detroit News. "We believe dealers and automakers are getting squeezed a little bit on pricing," with dealers reporting lower profits in the second quarter compared with earlier this year, says Schirmer. So far, they've mostly held the line on retail pricing, but it's not clear how long that can last, he says. And while there was a tariff-driven buying surge in March and April, sales declined in May, according to Cox Automotive data, suggesting that many consumers may be holding back on big purchases amid economic uncertainty. That slowdown has helped keep prices flat, says Schirmer. Another reason prices haven't soared: Most vehicles currently on dealer lots were built before the tariffs took effect. But that inventory is running out, says Schirmer. As dealer inventory turns over, newer models are more likely to reflect higher costs. Ford and Subaru have already raised prices on some vehicles by as much as $2,000, and more increases are likely to follow. Depending on the model, tariffs could add anywhere from $2,000 to more than $15,000 to the cost of a new vehicle, according to estimates from the Anderson Economic Group. Uncertainty is a recurring theme when it comes to tariffs — and the auto market is no exception. It's still largely unclear how prices might change or when that might be, says Yoon. But with auto loan interest rates expected to stay relatively stable through the rest of the year, buying now can make sense if the financing works for your budget, he says. Used cars or leases could also be smart alternatives to buying new models, especially if they help lower monthly costs. Either way, "if the car you want to buy is available, you should just go buy it," Yoon says.
