After deductions for discounts and promotions, the average price of new cars in the USA in April increased by 2.5% compared to March, far exceeding the typical increase of 1.1% during the same period in recent years. The only larger increase in the past decade occurred in April 2020, when prices rose by 2.7% due to factory shutdowns related to the pandemic.
The effect of auto tariffs is becoming apparent, as new car prices in the USA are experiencing the second-largest monthly increase in nearly a decade.
On May 12, data from Cox Automotive's Kelley Blue Book showed that new car prices in the USA saw significant growth in April, indicating that the impact of the Trump administration's 25% tariffs on imported autos from countries like Mexico and Canada has begun to manifest in the market. Specifically:
After discounts and promotions, the average price of new cars in April increased by 2.5% compared to March, far exceeding the usual 1.1% increase for the same period in recent years.
In the past decade, the only larger increase occurred in April 2020, when prices rose by 2.7% due to factory shutdowns related to the pandemic.
It was reported that this wave of new car price increases in the USA is not a result of rising prices by auto manufacturers, but rather panic buying by consumers that has driven up the actual Fill Price.
Additionally, a decrease in inventory suggests that auto prices may continue to rise in the coming months.
Consumer panic buying is driving the price increase.
According to reports, Auto Manufacturers are adapting to the new tariff environment, but most manufacturers have not yet raised their prices.
Some companies like Hyundai, Ford, and Jeep manufacturer Stellantis have even launched special offers to appease buyers and maintain sales momentum.
However, the psychology of Consumers expecting tariffs to eventually drive up prices has led to increases in Fill Prices for certain models. Cox Analyst Erin Keating stated:
"These models have gained more demand, so the local pricing dynamics at the Dealer level may have pushed prices up."
Additionally, Car Dealers and executives have indicated that consumer demand has significantly risen over the past few months, with buyers eager to complete purchases before tariffs lead to price increases. According to Cox Automotive data, this has translated to new car buyers paying more on average at Dealers.
In addition to the rising prices of new cars, the effect of tariffs has also spread to the used car market in the USA.
According to Cox Automotive's Manheim Used Vehicle Value Index, wholesale prices for used cars increased by 4.9% year-on-year to 208.2 in April, a 2.7% increase compared to March.
The decline in inventory suggests that car prices will continue to rise.
The decrease in Dealers' inventory may indicate that prices will face upward pressure in the coming months.
Cox Automotive's chief economist Jonathan Smoke pointed out in a recent webinar that Dealers' inventory has fallen below 2.6 million units, and as sales surge and importers reduce deliveries, supply may further decline.
Additionally, Paul Zimmermann, partner at Matick Automotive Group in Michigan, expressed genuine concerns about supply chain issues, stating that vehicle inventory is decreasing in certain regions following strong sales in April.
