The April Consumer Price Index (CPI) report revealed that new car prices were flat, surprising many who expected President Trump’s auto sector tariffs to drive prices higher. However, inventory levels at dealerships may have shielded car buyers from tariff-induced price hikes—at least for now.
April CPI Results and Price Trends
In April, new vehicle prices remained unchanged from the previous month and increased by 0.3% year-over-year. Meanwhile, used vehicle prices fell by 0.5% but rose 1.5% from the same month last year. The report comes on the heels of Trump’s 25% foreign-made auto tariffs, which began on April 3 and affected not only European and Asian manufacturers but also U.S. automakers like GM (GM), Ford (F), and Stellantis (STLA), who import vehicles from Canada, Mexico, and China.
Tariffs and Inventory Impact
Expectations were high that new vehicle prices would rise as tariff costs were passed on to consumers, with used car prices also expected to increase as buyers shifted to pre-owned vehicles. However, a significant factor in holding prices steady may have been dealers and automakers drawing from their preexisting new car inventory, which included imports not subject to tariffs. Dealers promoted these tariff-free vehicles as a sales tactic in the highly competitive new car market.
Shrinking Inventory Levels
The number of cars available at dealerships has been shrinking. Vehicle data site CarPro reports that overall industry stock in April dropped to 2.6 million vehicles, down from around 3 million, with days of supply falling to just over 60. This is below the average of around 70 days of supply. For instance, Toyota (TM) had only 10 to 15 days of supply, while GM had about 50 to 60 days. Stellantis, during a troubled period in 2024, had over 100 days of supply, though this has since been reduced significantly.
Sales Gains and Tariff Guarantees
Several automakers saw significant sales increases in April, including Hyundai (up 19%), Honda (up 17%), Ford (up 15%), and Toyota (up 8%). GM and Stellantis do not report monthly sales figures. Additionally, some automakers, like Hyundai, have guaranteed pricing through the end of May, which could help keep prices stable in the short term. However, tariff-exposed shipments are expected soon, which could lead to further supply and pricing pressures in the weeks ahead.
Pricing Challenges Ahead
The question remains: how long will automakers be able to hold the line on prices? “Across OEMs, we continue to monitor post-tariff reactions,” said Deutsche Bank’s Edison Yu in a note. GM has stated it will not raise prices across the board but expects consistent price increases of 0.5%-1.0% for the year. Ford has extended employee pricing on most vehicles until July 4 (previously June 2) but has raised prices on Mexico-built vehicles.
Differences in Price Data
Kelley Blue Book (KBB), which tracks average transaction prices (ATP) at the dealership level, saw prices climb by 2.5% month-over-month in April, more than double the average monthly increase for the month. A KBB spokesperson noted that the deviation between KBB’s data and the government’s CPI reading could be due to timing differences, with CPI data potentially lagging behind KBB’s more current data.
Future Price Expectations
With tariffs on foreign-made autos still looming, prices are expected to rise, and April’s lack of price increases could just be a temporary blip. As noted by Deutsche Bank, Ford is already raising prices on its Mexican-built Ford Maverick, Bronco Sport, and Mustang Mach-E EV.