TrueCar CEO Scott Painter has expressed concerns regarding the impact of tariffs on the automotive industry, highlighting that they are contributing to increased vehicle costs. These rising prices are pushing some consumers away from purchasing new cars and towards the used vehicle market. Painter also discussed the current trend of discounting among automakers, indicating their efforts to manage inventory and sales in this challenging environment.
The cost of tariffs is becoming unsustainable for automakers, according to the president of a major public auto dealership group. Manufacturers are expected to pass these costs on to consumers through higher prices or by cutting features, though the exact impact on pricing has been somewhat muted so far, with overall vehicle prices rising only about 1%. However, some higher-end models have seen price increases, which could be an indirect effect of tariffs.
Major automakers have already faced substantial financial burdens due to tariffs. For instance, American companies like Ford and General Motors paid billions in 2025 and anticipate similar costs in 2026. Toyota reported a 25% drop in net income during the first nine months of its fiscal year 2026, with tariffs costing the company approximately 1.2 trillion yen, or about $8 billion. Toyota, which has 11 U.S. factories, producing 55% of its 2025 U.S. sales, stated that tariffs are "highly disruptive" and "cannot be sustained." The company also produces popular models like the Tacoma pickup in Mexico and most Lexus models in Canada or Japan, making them vulnerable to import duties.
An earlier estimate by consultant AlixPartners suggested that tariffs could increase car prices by nearly $2,000 per vehicle, with auto companies passing on about 80% of the $30 billion cost to consumers. This financial strain is forcing automakers to consider significant price adjustments to avoid substantial losses, with broader price hikes expected to become more apparent in the latter half of the year. TrueCar uses AI to monitor these affordability and purchasing trends, providing insights into how consumer behavior is adapting to the changing market conditions.
