^{Source: CNN}

Vehicle Supplies Plummet Amid Tariff Concerns

The U.S. automotive market is experiencing a significant decline in vehicle inventories as consumers hasten to purchase cars before the full impact of President Trump's 25% tariffs on imported vehicles and parts takes effect. According to Cox Automotive, the days’ supply of new vehicles dropped from 91 days in early March to 70 days in April—a substantial 23% decrease. Used vehicle inventories also fell, with days’ supply decreasing by four days to 39 days. ​

Jonathan Smoke, Chief Economist at Cox Automotive, noted, "The decline in new days’ supply was one of the largest drops we’ve seen in several years."​

Surge in Sales Ahead of Tariff Implementation

New vehicle sales have surged, running 22% above the seasonally adjusted pace of the previous year. Year-to-date sales volume has increased by over 8%, indicating a robust consumer response to the impending tariffs. ​

In the used vehicle market, sales are up sharply, with a 7% increase compared to the same period in 2024. ​

Potential Price Increases Loom

Industry experts warn that the 25% tariffs could add significant costs to vehicles. Estimates suggest that prices for imported vehicles could rise by $5,000 to $10,000, with electric vehicles potentially seeing increases of $12,000 or more.

Erin Keating, an executive analyst at Cox Automotive, stated, "Consumers can expect a 15% to 20% price hike on new vehicles affected by the tariffs." ​

Automakers Adjust Strategies

In response to the tariffs, automakers are modifying their operations. General Motors has increased production at its Indiana pickup truck plant and canceled previously scheduled downtime at a Tennessee facility. ​

Stellantis temporarily halted production at its Windsor, Canada, and Toluca, Mexico, plants, leading to temporary layoffs of 900 U.S. workers. ​

Dealers Offer Incentives Amid Uncertainty

To attract price-conscious consumers, automakers like Ford and Stellantis are offering "employee pricing" deals. Nick Anderson, general manager of a Ford dealership in Missouri, observed that these discounts, coupled with tariff concerns, have driven increased showroom traffic, though profit margins have been affected. ​

Potential Policy Revisions on the Horizon

President Trump has hinted at a possible pause or exemption for the 25% auto tariffs, acknowledging the need to give manufacturers time to adjust. However, specific details and timelines remain unclear. ​‍

Industry stakeholders are closely monitoring developments, hoping for clarity to mitigate the tariffs' impact on production costs and consumer prices.​

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