How are auto makers going to handle tariffs?

[Sikkun]

The park ranger who lost their job this week sure as hell won't be buying a new vehicle any time soon.

Average age of vehicles on the road is already hitting record highs.

But hey some people are here to think 50k+ for new cars is not a cause for them to sell less.

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[MonkeyNutz]

What do we think Ford will do with Mach-E factory orders not yet fulfilled?
Can they just not deliver the car?

They could handle it several different ways. I‘m hoping that they find a way to deliver any confirmed orders with locked-in pricing. Which means they probably have to eat the tariff, but it’s either that or potentially completely lose the sale and have to try to ship and sell more cars in Canada and Brazil. Kinda hard to ship already-built MME’s to the UK, Japan or EU, where they’re selling well, as the charge ports don’t match up and Japan and UK, Australia/ NZ all get the right hand drive versions.

I don’t see them shutting down the production line, but USA sales will probably become limited only to confirmed special orders. Unless they can distribute costs of the tariffs across their product lines to offset the impact.

 

[music_cities]

I'd just like to point out that the tariff is on the wholesale value, not the retail value, so the end-user price increase should be less than 25%. But, also, if Canada has retaliatory tariffs on automobile parts, and if parts and cars cross the border multiple times, that will magnify the tariff effect, so it could be more than 25%.

 

[Snakebitten]

Every vehicle I have purchased cost more than the previous one. And since around 2015, the price for the F150's I have purchased has skyrocketed. Nearly doubled for the same make/model/trim.

Didn't have tarrifs to blame for any of that.

I'm just saying tarrifs or no tarrifs, I can't imagine vehicles will just stop increasing in price. It's crazy

 

[Sikkun]

Every vehicle I have purchased cost more than the previous one. And since around 2015, the price for the F150's I have purchased has skyrocketed. Nearly doubled for the same make/model/trim.

Didn't have tarrifs to blame for any of that.

I'm just saying tarrifs or no tarrifs, I can't imagine vehicles will just stop increasing in price. It's crazy

There was also a steel and aluminum tarrif during those years….among others.

You might have more tarrifs to blame it on than you think.

 

[DennisD]

Every vehicle I have purchased cost more than the previous one. And since around 2015, the price for the F150's I have purchased has skyrocketed. Nearly doubled for the same make/model/trim.

Didn't have tarrifs to blame for any of that.

I'm just saying tarrifs or no tarrifs, I can't imagine vehicles will just stop increasing in price. It's crazy

If I were to purchase the exact same type of Mach E now, it would be much less expensive now than it was 3 years ago.

While this is/was an unusual time, I chuckled when you said car prices always go up when you could simply read the many threads on this forum that would suggest quite the opposite with no to very few tariffs currently in place.

In fact, I have never lived in a time where they have gone down collectively at this fast of a pace with both used and new.

I believe, if the tariffs take effect that the car prices will be close to what they were 3 years ago (because many other items will go up in price) and sales will drop off the cliff (due to supply and demand).

Just a guess though but hold on tight, it will not be pretty for the average Joe due to the regressive "tax structure".

 

[MachhE-CT]

Don't forget insurance will jump too. It will cost the insurers more to fix and replace cars, and they will not just absorb the cost.

I bought my Mustang Mach E. It replaced a 2015 Mini Cooper which had a KBB of $3000. My Mach E has a value of $45000 . My insurance went up $40 per month. It is probably about the same as buying a new 45000 ICE vehicle

 

[Shepherd]

I am glad that I bought my Mach-E GT when I did. The 2023 model year is great, and I received the $7,500 tax credit.

My education informs me that interventions in markets usually produce unintended consequences. It will be interesting to see how this plays out.

I also feel like my timing was perfect buying my new Mach-e a year ago.

My prediction is Mexico will backtrack on earlier promises to the Biden administration. They will allow more transshipment of Chinese auto parts, which will be partly assembled in Mexico and imported piecemeal into the US. Order the pieces and build a grey-market Chinese EV in the US using some loophole to avoid tariffs.

 

[Teslaeata]

How are auto makers going to handle tariffs?

I doubt they’ll be doing the handling, the market does the “handling” the car makers do the reacting to the market.

 

[SonicBlue]

You can't be serious. ???

These are EV owners. For many, EV's are political.

Nailed it.

 

[NH_Pony_Boy]

How are auto makers going to handle tariffs?

I doubt they’ll be doing the handling, the market does the “handling” the car makers do the reacting to the market.

Instead of 'handle' use mitigate the damage.

 

[SonicBlue]

Let us try and do a thought exercise without involving politics.
Just an addressing of the facts.
The 25% tariffs on Mexico and Canada are going in effect on March 4th.
The Mach-E is built in Mexico so I assume that makes the whole vehicle subject to a 25% price increase.
Even cars built in the US have parts from both countries which would increase the price considerably.
If you have a car ordered from the factory, and it hasn't crossed the border yet, I think it is possible that Ford will not deliver that car as they cannot swallow the 25% price increase.
Is it possible the car makers will just not build new cars until the tariffs are rescinded?
That seems unlikely but it might be cheaper to shut down factories rather than build cars that you cannot sell because they are 25% more expensive than a Toyota.
What happens to the economy if the American automakers stop production and layoff tens of thousands of workers?
Seems like there is no good outlook on this.
On the upside this will increase the value of our used cars (but replacing it will be more expensive unless you buyJapanese).

I honestly have no idea how a tariff war would play out. Could get pretty ugly. But here are some basic principles:

1. A tariff fight is basically a game of chicken. But the American economy is massive, which basically makes us a semi in that game. Nobody would walk away unscathed, but you’d rather be the guy in the semi. We have more leverage.

2. Trump talked the same talk in his first term. Nothing much bad happened. More favorable trade deals were cut. Life went on.

3. Trump has a point that we need the level the playing field on tariffs.

4. At the end of the day, people just don’t understand Trump. He wants to win. That’s all he’s guided by. Racking up wins big and small. Wrecking the US economy is not a win.

Put these things together, and I’m just not gonna freak out about this. I think there’s a very good chance that this is all gonna work out just fine - and likely at least a little bit to our advantage. People need to stop freaking out. It’s exhausting and annoying.

 

[Teslaeata]

I honestly have no idea how a tariff war would play out. Could get pretty ugly. But here are some basic principles:

1. A tariff fight is basically a game of chicken. But the American economy is massive, which basically makes us a semi in that game. Nobody would walk away unscathed, but you’d rather be the guy in the semi. We have more leverage.

2. Trump talked the same talk in his first term. Nothing much bad happened. More favorable trade deals were cut. Life went on.

3. Trump has a point that we need the level the playing field on tariffs.

4. At the end of the day, people just don’t understand Trump. He wants to win. That’s all he’s guided by. Racking up wins big and small. Wrecking the US economy is not a win.

Put these things together, and I’m just not gonna freak out about this. I think there’s a very good chance that this is all gonna work out just fine - and likely at least a little bit to our advantage. People need to stop freaking out. It’s exhausting and annoying.

Markets will probably deal with the tariffed goods, if they’re more expensive people won’t buy them.

It’ll be the manufacturers and sellers who’ll suffer.

Whether it’s a good or bad thing, who can tell.

 

[NH_Pony_Boy]

I honestly have no idea how a tariff war would play out. Could get pretty ugly. But here are some basic principles:

1. A tariff fight is basically a game of chicken. But the American economy is massive, which basically makes us a semi in that game. Nobody would walk away unscathed, but you’d rather be the guy in the semi. We have more leverage.

2. Trump talked the same talk in his first term. Nothing much bad happened. More favorable trade deals were cut. Life went on.

3. Trump has a point that we need the level the playing field on tariffs.

4. At the end of the day, people just don’t understand Trump. He wants to win. That’s all he’s guided by. Racking up wins big and small. Wrecking the US economy is not a win.

Put these things together, and I’m just not gonna freak out about this. I think there’s a very good chance that this is all gonna work out just fine - and likely at least a little bit to our advantage. People need to stop freaking out. It’s exhausting and annoying.

His favorite talking point in term one was the record stock market. And in fairness it was at then record highs. The DJI is now almost a thousand points lower than it was on Inauguration Day.
The gift he has is to claim a victory and convince his base he won and then reverse the decision. I think that will surely happen when the market starts to face up to the fact that tariffs will indeed happen and the economy will suffer.

 

[Coffs]

History might repeat itself.

In the 80's Japanese companies showed the world that cars could be made reliable and cheap, US domestic couldn't compete so tariff's were introduced. That put the import way higher than domestic. Same thing would happen again.

The solution at the time? Build factories in the US.

So how will manufacturers handle it? Prices WILL go up. If the manufacturer is no longer competitive then maybe they will look at domestic manufacturing again but the executive branch can drop those Tariffs at any time unlike the 80's when it felt like the whole of Congress was onboard. So it might just be painful for a short while.

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