Author: Jack
POSTED ON 02 Jun 2019

Are Consumers Ready For Another Price Hike?

The ongoing trade war with China, along with various other tariffs in places set by the Trump administration, has caused an increase in new automotive prices. As to date, the price of a new vehicle has risen by 4 percent since a year ago according to LMC Automotive.

Now with the new threat of tariffs being placed on Mexico, Car buyers in the US might be in for more hurt – regardless if they are made in Mexico or not.

Due to the fact that a lot of the labor intensive jobs are done in Mexico, such as the wiring harness, the increase on tariffs would certainly be felt back in the States. Especially if the threat of raising the tariffs to 25 percent by Oct 1st is to be kept, industry expert fear that prices could jump up thousands of dollars.

A good example of this is if you were to buy a new Dodge Ram 1500 (which is assembled in Mexico) priced at $40,000 USD. With factory costing around $30,000 USD (easier math), that would equate to an extra $1,500 USD in tariffs. If the tariffs are in play by Oct, then that is an extra $7,500 USD in tariffs that either the manufacture will have to eat, or pass along to the buyers.

The issue only gets worse as more and more manufactures have set up facilities in Mexico to take advantage of the cheap labor and the extensive array of free trade agreements. If this trend keeps going, the new car market is truly going to be in a lot of trouble.