On 6 June 2022, Autovormers at Smirna Vehicle Assembly Plant in Nissan in Tennessee. The plant employs over 7,000 people and produces a variety of vehicles including Leaf EV and evil crossover.
Michael Welland / CNBC
Detroit- As an effective 25% tariffs on imported vehicles of President Donald Trump this week, despite a pullback on other country-based levies this week, analysts expect a large-scale global implication for the motor vehicle industry due to policies.
According to research reports by Wall Street and Automotive analysts, they are expecting a decline in vehicle sales in millions of people, high new and used vehicles and a fall in the cost of more than $ 100 billion for the industry.
Boston Consulting Group Automotive and Mobility’s global lead, Felix Stelmaszek said, “Now what we are seeing is a structural change, which is operated by policy, it is likely to last long.” “This can be the most resulting year for the auto industry in history – not only due to immediate cost pressures, but because it is forcing a fundamental change in how and where it manufactures the industry.”
The BCG hopes that the cost in the industry is expected to connect from $ 110 billion to $ 160 billion to $ 160 billion on the cost of cost in the industry, which can affect 20% of the US New-vehicle market revenue to increase production costs for both US and non-American manufacturers.
The Automotive Research Center for Michigan-based non-profit think tank believes that the cost for vehicle manufacturers in the US alone will increase by $ 107.7 billion. Which includes $ 41.9 billion for Detroit Automkers General Motors, Ford Motor And Chrysler Parents Descendant,
Both analysis takes into account 25% tariffs on imported vehicles implemented by Trump on 3 April as well as upcoming levy of the same amount on automotive parts which are ready to start by May 3.
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According to analysts, the automakers and suppliers may be able to tolerate some cost growth, but are also expected to pass with American consumers, which may be in low sales.
Goldman Sachs Analyst Mark Deleni said in Thursday’s investor note, “We believe that the proposed tariff will increase the cost of both imports and manufacturing vehicles in the US for a minimum mid -single digit thousand dollars levels in the US, and we believe that it will be difficult for the auto industry to pass it completely, especially with more softening the consumer’s demand,”
Goldman Sachs believes that new vehicles in the US will increase from $ $ 2,000 to $ 4,000 from the next six to 12 months time limit to reflect the tariff cost better.
The automakers have responded to tariffs in many ways. The manufacturers who are mostly domestic, such as Ford and Salentis, have announced temporary deals for employee pricing, while others, such as British car manufacturers Jaguar Land Rover, have stopped the shipment. Hyundai Motor has also said that this consumer will not increase prices for at least two months to reduce concerns.
In April, the consumer’s spirit became worse than anticipated as the expected inflation level reached the highest level since 1981, shown in a closely seen Michigan survey on Friday.
Sam Abelsmid, vice-president of Insights at Auto Advisory Firm Telemetry, hopes that many automekers have a minimum of two months of non-tariff affected vehicles, which will be able to sell before the need to increase prices due to tariffs.
Telemetry hopes that high costs for production, parts and other factors resulting in selling 2 million less vehicles annually in the US and Canada, which will have a wave impact on the comprehensive economy.
“A few million-un-units decreased in sales will have a financially widespread impact,” Abulemid said. “It is inspired by high prices, not only for vehicles, but in the entire board … which is going to limit people’s spending power.”
The power of new and used vehicles is a problem for many years. On average, the cost of new vehicles is approximately $ 50,000 reports of Cox Automotive. The figure does not include the cost of financing such a vehicle, which has increased considerably in an attempt to deal with inflation in recent years.
According to Cox, there are more than 9.64% levels of more than 9.64% for a new vehicle and up to 15% auto loan rates for a used car or truck.
“We expect to see the fall and then increase the rapid price because the Cosuch Automotive’s Chief Economist Jonathan Smoke said during a virtual event on Monday as the tariff is passed and tightened, which leads to an increase in all types of new vehicles.” “In the long term, we expect production and sales fall, to increase newly used prices, and to end some models.”
The expected price varies depending on the vehicle, but Cax has estimated an increase of $ 6,000 in the cost of imported vehicles due to 25% tariffs on non-US assembled vehicles, as well as an increase of $ 3,600 to vehicles assembled in the US due to the upcoming 25% tariff on automotive parts. As a result of the already declared tariffs on steel and aluminum, they are in addition to an increase of $ 300 to $ 500.
