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- New car price inflation may already be here, and tariffs will make it worse: Cox Automotive</p>
<p>Pras SubramanianJune 26, 2025 at 9:14 PM</p>
<p>Analysts at Cox Automotive believe tariff-induced price hikes are coming for new cars — and could already be here.</p>
<p>"The new vehicle market is likely to see the return of inflation, and it may already be happening," Cox senior economist Charlie Chesbrough said during the company's 2025 midyear review and second-half outlook.</p>
<p>"Given the impact of tariffs, prices are likely to start rising at a much faster rate, so the trend suggests higher vehicle prices are coming to the new vehicle market," Chesbrough added.</p>
<p>Chesbrough said the combination of higher-priced models affected by tariffs coming to replace depleted inventories, the declining use of incentives, and potential supply disruptions will create conditions that will shoot prices higher in the new car market.</p>
<p>Brand-new Subaru cars sit in a storage lot on March 24 in Richmond, Calif. Subaru issued a dealer bulletin saying it could no longer guarantee 2025 pricing as the Trump administration said it would place a 25% tariff on products from Canada and Mexico. (Justin Sullivan/Getty Images) (Justin Sullivan via Getty Images)</p>
<p>President Trump's auto sector tariffs began on April 3, but automakers had built up big buffers of non-tariffed supply before then.</p>
<p>Supply is a big factor in pricing, and that non-tariff supply is dwindling. Cox data shows that in March, the industry's supply stood at 92 days. In June, that figure fell to 70, with some automakers like Toyota (TM) and Honda (HMC) having around half that amount.</p>
<p>"The supply this year has been falling dramatically since March as the tariff-induced buying surge drew down available inventories," Chesbrough said.</p>
<p>Read more: 6 steps to find cheap car insurance in 2025</p>
<p>New car prices have recently been climbing higher, Cox and KBB found. (Cox Automotive)</p>
<p>Cox division Kelly Blue Book reports the average selling price of a new vehicle crept up to $48,799 in May, up from the month before but below the $50K mark seen in the height of the pandemic.</p>
<p>As prices are poised to rise, sales may soon drop accordingly.</p>
<p>May's sales pace fell to a seasonally adjusted annual rate of 15.6 million, Chesbrough said, with June slumping even further to 15.3 million, with more declines to follow.</p>
<p>"The impact of tariffs have not been felt, and that will change in the 2nd half of this year," Chesbrough said.</p>
<p>Chesbrough said the Cox team predicts that if tariffs remain in place, sales will fall around 1% to 2% to 15.7 million for the year, down from 15.9 million last year.</p>
<p>The pain from falling sales won't hit all automakers uniformly. While GM (GM) performed well in the first half of the year, Cox predicts Toyota (TM) and Ford (FORD) could outperform in the second half, based on strong results in the second quarter. Stellantis (STLA), Volkswagen, and Tesla (TSLA) may suffer as they saw dropping sales and market share in the first half of the year.</p>
<p>Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.</p>
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