June 14, 2018

Could Trump's car tariffs damage the car industry?

CNET - If The Donald does manage to get his 25 percent tariff imposed, foreign automakers have a few options. First, they could swallow the cost and continue selling vehicles at similar prices to what we have now. Naturally, this would totally hose their bottom lines and could have residual effects like the slower development of technology, etc., due to reduced budgets. Not ideal.

Next, these companies could pass the extra costs to the customers. That means that if you go to your friendly local Mercedes-Benz dealer and want to buy the E-Class wagon that you've been saving your pennies for, you'd have to shell out something like $78,000 for the base model, compared to $63,000 without the added tariff. Big bummer.

But it's still more complicated than that. If foreign-built cars were all of a sudden 25 percent more expensive to consumers, what would that mean for the industry in terms of lost sales? According to research firm LMC Automotive, it could cause a 10 percent reduction in total vehicle deliveries, which works out to around 2,000,000 sales.

1 comment:

Anonymous said...

And of course everyone can splash out $60K for a car, right? I mean, look at all the Mercedeses on the streets. Grocery clerks, baristas, school teachers, everybody's driving one.

Anyone who still thinks that the Duopoly or owner class gives a damn about us is a daftie.