Title: Automakers Absorb Tariff Costs to Maintain Consumer Confidence
The auto industry has been grappling with the impact of tariffs on imports such as aluminum and steel, which have led to increased prices in materials used for car production. Additionally, tariffs on foreign-made parts and imported vehicles reached up to 25% since spring this year. Despite these challenges, automakers have managed to absorb the costs without passing them onto consumers.
Data from Kelley Blue Book reveals that new vehicle transaction prices increased by only 1.2% in June compared to last year - a smaller price increase than the average annual increase over the past decade. This suggests that as tariffs were implemented, car prices rose at a slower pace than usual. Erin Keating, executive analyst for Cox Automotive (parent company of Kelley Blue Book), attributes this trend to two main factors:
1) When tariffs took effect in spring, many dealerships already had vehicles imported before the new taxes were imposed. This allowed them to maintain lower prices initially. 2) Car manufacturers saw an opportunity to attract more buyers by delaying price increases and capturing additional sales while they could. They also feared that if prices rose too high, consumers might stop buying altogether due to financial constraints.
The average cost of a new car now stands at nearly $50,000, with used cars averaging around $30,000. A significant number of new-car buyers are already paying over $1,000 per month on their loans, highlighting the importance of keeping prices stable for consumers who are already stretched thin financially.
In conclusion, automakers' decision to absorb tariff costs demonstrates a commitment to maintaining consumer confidence and ensuring continued sales despite challenging economic conditions. This strategy may prove beneficial in the long run by fostering loyalty among buyers and preventing them from turning away due to price hikes. However, it remains to be seen how sustainable this approach will be as trade tensions continue to escalate globally.
Source: [Original Article](https://www.npr.org/2025/07/30/nx-s1-5482857/automakers-eating-tariff-costs) #automakers
Check out my AI projects on <a href='https://huggingface.co/ghostail'>Hugging Face</a>, join our community on <a href='https://discord.com/invite/zgKZUJ6V8z'>Discord</a>, and explore my services at <a href='https://ghostai.pro'>GhostAI</a>!