New car dealers in the United States are expecting sales to take a hit if president Donald Trump’s imported vehicle tariff succeeds.
The Wall Street Journal reports dealers are readying themselves for a 25% tax on foreign-built vehicle sales, which would cover nearly half of all 2017 US sales.
It’s also worried the import tariff could swell the cost of US-built cars, many of which use non-US made parts.
Mazda and Mitsubishi dealers are most concerned because their entire range and stock relies on imports and would be forced to pump-up prices.
The Alliance of Automobile Manufacturers estimates the tariff would see roughly US$5800 added to the cost of a new car.
Subaru dealers like Tennessee’s Kelly Subaru say certain models’ monthly sales, like the Forester (US$22,750 base price), could fall off a cliff because they’re built entirely in Japan.
The tariff would make it “wildly uncompetitive” compared with the Indiana-made Outback (US$26,345), chairman Tim Kelly told WSJ.
In 2017, 36% of General Motors’ 1.1 million US sales were vehicles made overseas, LMC Automotive reports.
“What we’re now looking at is extremely disruptive to carmakers for their production setups and profit margins,” LMC Automotive forecasting vice president Jeff Schuster says.
Germany currently ships around 600,000 vehicles to the US each year, according to analysis firm Evercore ISI, estimating a 4.5 billion euro loss.
“Not a single car could be shipped with a profit to the U.S.,” senior managing director Arndt Ellinghorst says.
Volkswagen currently makes Passat sedans and Atlas SUVS in Tennessee, Volvo’s South Carolina plant makes S60 sedans and soon XC90 SUVs, Daimler makes GLE SUVs and C-Class sedans (and soon electric vehicles) in Alabama, and BMW has been making cars in South Carolina for nearly 25 years.
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