Wow, well it’s been a whirlwind of information since last Friday as the auto industry adjusts to the new tariffs. There was just a brief moment of euphoria two days ago when word came out that the President was pausing the reciprocal tariffs for 90 days, but it was short lived joy because he did not lift them on autos. Oh, well.
The initial panic from a week ago has subsided somewhat, which is good. The doom and gloom initial predictions for the auto industry and auto sales faded away as cooler heads analyzed the facts and figures. Cox Automotive, who I follow closely and believe them to be the most accurate predictors of the future, lowered its full-year U.S. forecast to 15.6 million from 16.3 million due to the tariffs. That would result in about a 2-percent decline from 2024 sales figures. If correct, that is a drop everyone could live with. The firm expects market strength through April and into May while prices are basically holding and people hurry in to beat the tariffs, before sales taper off.
As I told you, each car company is in a different position, depending on what percentage of vehicles sold in America are made in America.
Here is what we know about specific car companies and plans for the short term:
- Toyota-As I reported last week, says for now they will not raise prices.
- Hyundai-They, too, say the will hold the line on prices at least through May.
- Genesis-Same as Hyundai.
- Ford-Announced employee pricing on the huge majority of their vehicles, plus additional incentives on 2024s.
- Stellantis (Dodge, Chrysler, Ram, Jeep primarily)-They also announced employee pricing, OR some very large rebates and the customer can choose one or the other. They also announced temporary layoffs for 900 workers.
- Mercedes-Benz-They will not raise prices on 2025s in the short term.
- Honda-No price adjustments “at this time.”
- Audi, Jaguar, Land Rover, Aston Martin-Those car companies have stopped shipping vehicles to the U.S. presumably until they figure out what to do.
- BMW-Announced it will hold the prices on vehicles made in its plants in Mexico, like the 3-Series, at least through May.
- VW-Has told dealers that it would add an “import fee” to the window sticker of vehicles subject to the tariffs, but no official word of this yet.
- Nissan-Cut prices on Rogue and Pathfinder to make vehicles “more affordable” but no word yet on the rest of the lineup.
- General Motors-They have been strangely quiet. No word on price adjustments, they have only said they were shifting as much production as possible from out of the U.S. to plants inside the U.S.
- Ineos-Maker of the French Grenadier & Quartermaster has said they have to raise prices by 5-10% due to the tariffs.
- Infiniti-The luxury arm of Nissan has halted production of the QX50 & QX55 made in Mexico. No word on pricing adjustments.
- Mazda-In an announcement to dealers, Mazda said Wednesday afternoon that it would hold prices until May 1, 2025 but made no commitments past that. The automaker only builds roughly 20% of its vehicles sold here in the United States.
- Volvo-The Swedish automaker says they will discontinue sales of the S90 sedan next year in the U.S. instead of dealing with the tariffs. That is code for: We only sold 1,300 of them in 2024 here and we were going to kill it anyway. They axed the S60 sedan last year. They also said they would cut incentives in America, but you can bet that won’t last if sales of Volvo SUVs start to fall off.
- The rest-We have not heard the plans for the remaining car companies that sell vehicles in America. Most notable, nothing from Kia or Subaru.
Tariffs on vehicles made in Mexico & Canada explained
As I gave you my tariff report last week, it was unclear how vehicles made to our northern and southern neighbors would be affected. This is a huge issue for the Detroit 3: Ford, General Motors, and Stellantis. It is a little complex, so here is an example:
Most Canadian and Mexican vehicles are subject to a 25 percent tariff rate only on the non-U.S. content in them. U.S. content is defined in Trump’s presidential proclamation as the value of parts “wholly obtained, produced entirely, or substantially transformed in the United States.”
So, if a Mexican or Canadian-made vehicle valued at $50,000 has U.S. components in it worth $20,000, the importer of that vehicle would only need to pay a 25 percent tariff on the remaining $30,000, not the 25% on the full sticker price of the car. The more American content, the lower the tariff amount.
Another caveat: Vehicles that comply with the rules of the United States-Mexico-Canada Agreement are eligible for the U.S. content discount. The rules include provisions requiring 75 percent of the value of the imported vehicle to come from the U.S., Canada or Mexico and 40 to 45 percent of the vehicle’s value to come from workers earning at least $16 per hour. Clear as mud, eh? Luckily most vehicles made in North America will meet those requirements. However, Volkswagen imports powertrains for the Audi Q5, while BMW and Mercedes-Benz rely on European-sourced engines and transmissions for Mexico-made vehicles. That means some of their vehicles are unlikely to meet the USMCA’s rules, making them subject to the full 25 percent auto tariff.
How can you tell where a vehicle is made?
As I explain in this article I wrote about Monroney stickers, they hold a lot of information, including where a vehicle is made, and where the percentages of parts come from for the assembly process.
If for some reason a vehicle does not have a Monroney sticker, you can tell where it was made by simply looking at the Vehicle Identification Number (VIN) on the door jamb or the bottom of the windshield. The country code is the very first number or letter in the 17-digit VIN. Here is the breakdown: cars made in the U.S. start with 1, 4 or 5. Canada is 2, and Mexico is 3. Japan is J, South Korea is K, England is S, Germany is W, and Sweden or Finland is Y.
Photo: Audi models at Volkswagen Group of America's New Port Facility In Freeport, TX. (October 2024.) Credit: VW Group of America.
