Bad news for automakers: This is the real reason why car prices aren’t going up

Since January 2024, the price of a new car has increased by more than twenty percent in the United States. The price hike came in 2021 and 2022, when the average sticker price rose 17.8 percent, and has since moderated slightly.

Since January 2023, prices for new cars have remained relatively stable, but have settled at a much higher price point when compared to those paid before the COVID-19 pandemic.

Why US car makers say they can’t increase prices as tariffs raise costs

Leaders in the US automotive industry are not expecting prices to increase much further, even as the White House’s tariff makes imported cars and some parts essential to the manufacturing of vehicles more expensive. CEO of GM, Mary Barra, the leader of the country’s largest car company, told CNN that "pricing is going to stay at about the same level as it is," pointing to a slowdown in demand that could be exacerbated if potential car buyers were met with even higher prices.

Analysis from The Dealership Guy, a social media account dedicated to news from the industry, also points to a decrease in demand, with May volumes coming in 20 percent lower than they were in April.

Auto debt has risen 25 percent since 2020

So, even if car companies want to push the price of tariffs to the consumer, the conditions of the market might make that impossible, which means incurring financial losses. As of the end of 2024, Americans owed more than $1.5 trillion in auto loans, a 25 percent increase compared to the figure captured 4 years earlier. Much of the increase in debt can be attributed to higher interest rates for borrowers as the Federal Reserve moved to hike rates as unemployment fell to the lowest levels in recent history, and inflation led to price increases across critical sectors, including the automotive industry.

Related stories

Canada

More Canadians looking to buy property in Europe

Temu and Shein

No relief on the way for Temu shoppers in the US

According to the Bureau of Economic Analysis, in 2024, the companies involved in the manufacturing of motor vehicles, bodies, trailers, and parts industry took in around $19 billion in profits, before taxes.

Get your game on! Whether you’re into NFL touchdowns, NBA buzzer-beaters, world-class soccer goals, or MLB home runs, our app has it all. Dive into live coverage, expert insights, breaking news, exclusive videos, and more – plus, stay updated on the latest in current affairs and entertainment. Download now for all-access coverage, right at your fingertips – anytime, anywhere.