Detroit — Carmakers have been absorbing billions in added expenses since US President Donald Trump’s tariffs took effect in April, sparing US car shoppers from sticker shock. So far.
Car prices were supposed to have bolted higher by now, car executives and analysts predicted. But that has not happened, mirroring some other industries where companies have decided to eat added expenses rather than passing them on to consumers.
The average manufacturer’s suggested retail price (MSRP) on new vehicles in the US rose less than 1% from mid-March to mid-August, according to car-shopping site Edmunds.
That restraint from the carmakers has carried into this northern autumn, as car brands are implementing only modest price increases as they roll out their 2026 model-year line-ups. Car brands tacked on 3.3% to their average sticker prices in August, according to Cox Automotive, up from last year’s increase, but in line with historical averages.
But now that it appeared many of Trump’s tariffs were likely to stick, carmakers were under growing pressure to raise prices, analysts and dealers said. General Motors said it would face up to $5bn in gross tariff-related costs this year, while Ford cited a $3bn gross hit. The car companies have a few levers they can pull before burdening customers with that added cost, from absorbing it internally to asking suppliers or dealers to shoulder some.
The reticence among car executives to stick customers with tariff-related expenses reflects the reality that US consumers might not be able to stomach significant price increases, after a multiyear run-up in new- and used-vehicle prices after the pandemic. Average transaction prices have risen about 30% since 2019, to $49,077, according to Cox Automotive.
Hyundai North America CEO Randy Parker said the South Korean carmaker was holding firm on pricing to guard against losing customers to rivals, even though tariff costs eroded the company’s bottom line in the second quarter by about $600m.
“Our priority remains ensuring that we’re competitive through affordability,” Parker said this month.
Tariff-related costs amounted to nearly $2,300 in added cost per vehicle in June on an annualised basis, if applied to all domestic and imported vehicles, according to an analysis from consultant and former GM executive Warren Browne.
Browne believes that carmakers will begin to raise prices starting in the second half of the year to protect their bottom lines, even though those higher prices will dampen demand and lead to an overall drop in US vehicle sales.
Trump blowback
Kevin Roberts, director of economic and market intelligence at online marketplace CarGurus, also predicts that carmakers will gradually raise MSRPs and focus more on pricier models with higher profit margins. Resisting price hikes has allowed companies to avoid blowback from Trump, who has publicly criticised Walmart, Amazon.com and other companies that have signalled plans to raise prices to offset tariff expenses.
Carmakers in some instances have hiked prices on specific models, including Ford’s Mexico-produced vehicles, some Subaru models and at luxury brands like Porsche and Aston Martin.
Carmakers also have been subtly passing on some tariff costs to consumers without direct price increases, analysts and dealers said. For example, destination fees, which are essentially the delivery fees to the dealership, rose 8.5% for the 2025 model year, to $1,507, Edmunds found. This was a much more significant jump year on year than in the past decade.
Mike Manley, CEO of large dealership chain AutoNation, said during a July earnings call that he expected carmakers to maintain competitive pricing on their top models, and implement minor adjustments across the entire portfolio over time.
Scott Kunes, COO of a US Midwest dealer group, agrees, saying the carmakers do not want to lose customers to competitors by jacking up prices too quickly.
“There’s still a very competitive landscape out there and market share is so huge to these manufacturers,” he said. “It’s going to be very, very gradual.”
Reuters
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