Paying for tariffs! The average price of new cars in the U.S. in April saw the largest increase since the pandemic

The effects of auto tariffs are becoming evident, as new car prices in the United States are experiencing the second-largest monthly increase in nearly a decade. On May 12, according to data from Cox Automotive's Kelley Blue Book, new car prices in the U.S. saw a significant increase in April, indicating that the Trump administration's 25% tariffs on imported cars from countries like Mexico and Canada have begun to impact the market. Specifically: After discounts and promotions, the average price of new cars in April rose by 2.5% compared to March, far exceeding the typical increase of 1.1% during 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 is reported that the current surge in new car prices in the U.S. is not due to price increases by automakers, but rather consumer panic buying driving up actual transaction prices. Additionally, the decrease in inventory suggests that car prices may continue to rise in the coming months. Consumer Panic Buying Drives Price Increases Currently, automakers are adapting to the new tariff environment, but most manufacturers have not yet raised their prices. Some companies, such as Hyundai, Ford, and Jeep manufacturer Stellantis, have even introduced special offers to appease buyers and maintain sales momentum. However, consumer expectations that tariffs will ultimately drive up prices have led to increased transaction prices for certain models. Cox analyst Erin Keating stated: "These models have seen increased demand, so local pricing dynamics at the dealer level may have pushed prices higher." Moreover, auto dealers and executives have indicated that consumer demand has significantly increased in recent months, with buyers eager to complete purchases before tariffs lead to price hikes. According to Cox Automotive data, this has translated into new car buyers paying more on average at dealerships. In addition to rising new car prices, the tariff effects have also spread to the used car market in the U.S. According to Cox Automotive's Manheim Used Vehicle Value Index, wholesale prices for used cars rose by 4.9% year-on-year to 208.2 in April, and increased by 2.7% compared to March. Declining Inventory Suggests Continued Price Increases The reduction in dealer inventory may indicate that prices will face upward pressure in the coming months. Cox Automotive Chief Economist Jonathan Smoke pointed out in a recent webinar that dealer inventory has fallen below 2.6 million units, and with sales surging and importers reducing deliveries, supply may further decline. Additionally, Paul Zimmermann, a partner at Matick Automotive Group in Michigan, expressed "real concerns about supply chain issues," stating that vehicle inventory is decreasing in certain areas following strong sales in April