President Trump’s 25 percent invoices for imported vehicles, which came into force last week, are already sending terror through the automotive industry, urging companies to stop cars from transporting cars to the United States, closing factories in Canada and in Canada.
Jaguar Land Rover, based in Britain, said she would temporarily stop exporting her luxury cars to the United States. The Stelantis Ided factories in Canada and Mexico made by Chrysler and Jeep vehicles and dismisses 900 US workers who provided these factories with engines and other parts.
Audi, the luxurious part of Volkswagen, also stopped exporting car to the United States from Europe, telling representatives to sell what they still had in their lots.
If other highways are making similar moves, the financial impact could be serious, leading to higher cars and widespread redundancies. Cars’ invoices are one of the first of the many contributions to the industry that Mr Trump has in his eyes and could offer early indications of how businesses respond to his commercial policies, including whether they increase prices or increase construction in the United States. The President also said he also wants to tax the imports of drugs and computer chips.
Implementing the new invoice to imported cars could increase their costs by consumers by thousands of dollars, strongly reducing demand for these vehicles. For some Jaguar Land Rover or Audi models, invoices could amount to more than $ 20,000 per car.
While much of the initial impact of invoices has destroyed, in at least one case, Mr Trump’s duties had the ascending result of increasing production in the United States. General Motors said late last week that it would increase the production of light trucks at a factory near Fort Wayne, Ind.
The long -term impact of 25 % of invoices is unclear. Many automakers are still trying to understand how to avoid increasing prices so much that consumers can no longer afford the new cars. Investors are pessimistic. The shares of Ford Motor, GM and Tesla have fallen in recent days of trading.
“Everyone in the car supply chain focuses on what they can do to minimize the pricing impact on their own balance sheets and prices,” said Kevin Roberts, director of financial and information market in Cargurus, an internet shopping site.
However, motorists should never have to deal with such high invoices with such a little notice. Nor did they have so little picture of what the president would do next, analysts and representatives said.
“The traditional Playbook is not enough,” said Lenny Larocca, who drives the car team to the KPMG consulting.
Mr Larocca predicted that automakers would focus more and more on the production of larger, heavier sports vehicles and trucks. These vehicles, many of which are assembled in US factories, are usually the most profitable and give companies more room to absorb the cost of invoices instead of transferring it to customers.
Many modern assembly lines are able to produce different models, giving companies flexibility to move the most profitable vehicles and abandon vehicles that do not make so much money. Mercedes-Benz said she would benefit from the flexible assembly lines at her factory in Alabama.
This strategy comes with disadvantages. It can be more difficult for car buyers to find new cars with a moderate price. Already, the average price of a new car is almost $ 50,000.
Analysts say this is very clear: invoices will not ask companies to open new factories or reopen closed plants immediately. Companies will not take this expensive step until they are sure that invoices are permanent and that they will invest hundreds of millions – or billions – in new production capacity.
“I haven’t seen big moves,” Mr Larocca said. “Wait and see.”
Some highways and suppliers expanded their US companies before Mr Trump assumes duties. Often, they react to the pandemic crown, when it became dangerous to rely on distant factories for critical places. Others made large investments in factories made by electric vehicles or EV batteries to take advantage of the motives offered by Biden’s management.
ZF, a German spare parts manufacturer, spent $ 500 million last year to expand a factory in South Carolina that produces BMW broadcasts and other automakers. And in recent years GM has opened two US battery plants with a South Korean partner, LG Energy Solution, to make the most important element of electric vehicles.
In the short term, some foreign highways can simply stop sending vehicles to the United States, either because they can no longer make a profit or because they can make more money elsewhere. This can be the case with Jaguar Land Rover. The company, known for luxury sports services manufactured in Britain, sells about one fifth of its car in the United States.
If other companies stop selling some models to Americans, consumers will have fewer vehicles to choose from and other automakers will have more room to raise prices.
So far, however, invoices have not led to widespread prices for new cars. Hyundai Motor said last week that it would not increase the proposed retail price of the Hyundai and Genesis cars by June 2.
Of course, car dealers can increase prices, even if an automotive industry does not bind. This happened a lot during the pandemic, when the lack of computer chips and other parts limited the supply of new vehicles.
Representatives and automakers have reported lively sales in recent days as people rushed to buy vehicles before the invoice is entitled. The average time a vehicle spent on the lot fell from 77 days in late January to less than 50 days in early April, according to Cargurus.
Demand was particularly high for Japanese brands such as Honda, Subaru and Nissan, apparently because buyers assume they are imported, said Sean Hogan, Vice President of Sierra Auto Group, who holds twelve representatives in southern California. All three Japanese companies have factories in the United States, though they import some cars.
Another invoice will come on May 3, when the Trump administration will apply invoices to car segments. This means that even cars manufactured in the United States will be affected because almost all vehicles contain abroad. Repairs will also become more expensive.
“The educated audience definitely makes some moves to move on from the invoices, which I think are smart,” Mr Hogan said.
But the long -term impact of Mr Trump’s commercial policies is still impossible to predict, he said. “This administration is moving quite quickly and you really don’t know what will happen next,” Hogan added. “I love.”
Neal e. boudette and Melissa eddy They contributed reports.
