GlobalData reduces US light vehicle sales outlook following tariff announcements

GlobalData

Mon, Apr 7, 2025, 4:09 AM 5 min read

GlobalData has carried retired elaborate investigation connected the apt interaction of tariffs connected automotive imports to the US, including some finished Light Vehicles (LVs) and automotive parts.

The pursuing represents a summary of the tariffs that subordinate to the automotive industry:

• As of April 3rd, 25% tariffs are successful effect connected imports of finished vehicles. While this applies to each countries, vehicles from Canada and Mexico that are compliant with the USMCA commercialized statement rules are taxable to taxes lone connected their non-US content. US contented is defined arsenic “the worth of parts “wholly obtained, produced entirely, oregon substantially transformed successful the United States.”

• For vehicles not compliant with the USMCA and imported from Canada oregon Mexico, further 25% tariffs stack connected apical of existing tariffs, raising the full to 50% successful immoderate cases.

• 25% tariffs connected a fig of automotive parts – including engines, transmissions, powertrain and electrical components – volition spell into effect connected May 3rd. Parts that are compliant with the USMCA rules volition not beryllium taxed until the US Commerce Department establishes a process to use the tariff to lone non-US content.

• 25% tariffs connected alloy and aluminum imports are besides successful effect. Derivative products of these metals are besides taxable to tariffs, which would see immoderate automotive parts specified arsenic bumpers. There are nary exemptions for definite trading partners, arsenic had antecedently been the case.

• The reciprocal tariffs announced connected April 2nd bash not use to the automotive industry.

The interaction of these tariffs volition beryllium far-reaching, fixed that astir 47% of LVs sold successful the US successful 2024 were assembled extracurricular the country, and those that were built successful the US mostly incorporate important percentages of imported content.

While immoderate of the further costs whitethorn beryllium absorbed by OEMs and the proviso chain, we expect the bulk of the outgo increases to beryllium passed connected to the consumer. This volition exacerbate existing problems with affordability successful the US marketplace and truthful alteration sales.

Our Q1 2025 forecast called for 16.1 mn US income successful 2025, and 16.4 mn units successful 2026. However, that forecast was produced earlier the latest announcements and assumed that the menace of tariffs was mostly a negotiating maneuver that was being utilized to extract concessions from different countries. While we did origin successful a flimsy antagonistic interaction connected income owed to the uncertainty being created by the perpetually changing commercialized picture, we did not presume that immoderate tariffs would really spell into effect. We present estimation 2025 US income astatine 14.9 mn units. This represents a alteration of 6.6% YoY and a simplification of 1.2 mn from our Q1 2025 forecast. For 2026, we expect income to diminution further, to 14.5 mn units, with the tariffs assumed to beryllium successful effect for the afloat year. We presume that the tariffs stay successful spot permanently, arsenic it could beryllium hard for aboriginal administrations to region them owed to Union opposition. Over time, greater localization of accumulation and adjustments successful user expectations astir pricing could spot income gradually recover, portion remaining beneath the pre-tariff outlook.