Latest news with #carPrices
Bloomberg
01-07-2025
- Automotive
- Bloomberg
US Auto Sales Lose Steam Amid Price Pressure
US auto sales are losing momentum after a springtime surge fueled by shoppers racing to buy cars before President Donald Trump's auto tariffs drove up prices. Bloomberg's Keith Naughton has more on the story. (Source: Bloomberg)
CNN
16-06-2025
- Automotive
- CNN
Despite two months of tariffs, car prices aren't going up. Is now the time to buy?
American car buyers braced for the worst when President Donald Trump's auto tariffs started taking effect in April. But so far, prices are little changed. However, industry experts don't expect that will remain true for long if tariffs stay in place— so Americans may want to buy a car now before prices start to rise within a few months. 'So far there's a mismatch between the expectation of what would happen, and the reality of what has happened with prices,' said Ivan Drury, director of insights at car buying research site 'But I still think we're still going to prices start to take off in two to three months.' Even with 25% tariffs on all imported cars and auto parts, prices are mostly being kept in check. The price paid for new cars in May fell 0.2% on average compared to the month before, according to data from Edmunds, and they rose only 2.5% compared to the pre-tariff period in March. That was also reflected in the government's consumer price index for May, which reported both new and used car prices dipped when adjusted for seasonal factors. There are numerous factors keeping prices steady. Tariff fears kept buyers away in April and May, and reduced demand limited the dealers' ability to raise prices. Experts CNN spoke to say the auto industry is also concerned about announcing big price hikes that could anger the Trump administration. But mostly, dealers are still working through their supply of pre-tariff cars. Most of the cars that have been sold since the imposition of tariffs in April were either imported into the United States or built before the tariffs went into effect, Drury said. 'The impact is not there yet,' he said. In March, automakers had between a 30- and 77-day supply of cars on the lots, depending upon the manufacturer, according to Edmunds. Additionally, the customer demand simply is not there. Some buyers rushed to buy cars in March before the tariffs were put in place, creating a surge in sales in the first quarter and weakening demand since then. Plus, concerns about the economy and job security, along with high interest rates, could be keeping some from making a big purchase. While Edmunds has yet to give a second-quarter sales forecast, Drury said 'the odds are good' that trend will continue and sales will be down or, at best, flat compared to the same time last year. But Drury said the lack of price increases could start to draw consumers back into the car buying market later this year. The Conference Board reported in May that 12.1% of Americans consumers were considering purchasing a new car in the next six months. That's a significant jump from the 10.6% who said the same in April, and more in line with normal seasonal interest in car purchases. When customers do jump back into the market for a car, they may see prices creep up. Every automaker is affected by the tariffs. Except for Tesla, every major company imports cars they sell at US dealerships from foreign plants, accounting for 46% of US auto sales in 2024, according to S&P Global Mobility. Even those built at American factories use imported parts. Drury said some manufacturers are already raising costs in ways that don't show up in the price, like adding fees and reducing incentives offered to buyers. But as tariffed vehicles begin to hit the lots, experts expect them to eventually pass some of that cost on. Car prices are not set by the automakers – they're negotiated between dealers and buyers. But automakers do set a 'manufacturers' suggested retail price' or MSRP, also known as the sticker price. Adam Jonas, auto analyst at Bank of America, thinks that automakers will likely raise the MSRP later this year when the 2026 model year cars start being delivered to dealers. 'We're hearing price hike announcement slowly,' Jonas said at a recent Bank of America conference. 'I think with the changeover to 2026 models, (that) will be the opportunity for companies to raise prices on new vehicles so they don't enrage certain folks that might come down on them for raising prices.' Until then, automakers are willing to pay some of the cost of tariffs out of reduced profits, partly due to weaker demand from buyers, partly to avoid angering the Trump administration. Drury said even when do automakers raise prices, they will be careful not to attribute the increases to tariffs. 'I think they've learned there's nothing good that comes from doing that,' he said.
New York Times
07-05-2025
- Automotive
- New York Times
Live Updates: Fed Expected to Hold Rates Again
Auto rates have been trending higher and car prices remain elevated, even before U.S. tariffs threaten to push prices up even more. The Federal Reserve is expected to keep its key rate steady on Wednesday, after a series of cuts that lowered rates by a full percentage point last year. That means consumers looking to borrow are likely to have to wait a bit longer for better deals on many loans, but savers will benefit from steadier yields on savings accounts. The central bank is waiting for more clarity on the economic outlook and the impact of President Trump's policies on tariffs, immigration, and widespread federal job cuts. Mr. Trump has publicly attacked Fed Chair Jerome H. Powell and his colleagues for keeping borrowing costs too high. The Fed's benchmark rate is set at a range of 4.25 to 4.5 percent. In an effort to tamp down inflation, the central bank began lifting rates rapidly — from near zero to above 5 percent — between March 2022 and July 2023. Prices have cooled considerably since then, and the Fed pivoted to rate cuts, lowering rates in September, November and December. Mr. Trump's inflation-stoking polices could prompt the Fed to delay more rate cuts. But at the same time, longer-term interest rates set by the markets have been extremely volatile, influencing a wide range of consumer and business borrowing costs. Auto Rates What's happening now: Auto rates have been trending higher and car prices remain elevated, making affordability a challenge. And that is before U.S. tariffs threaten to push prices up even more. Car loans tend to track with the yield on the five-year Treasury note, which is influenced by the Fed's key rate. But other factors determine how much borrowers actually pay, including your credit history, the type of vehicle, the loan term and the down payment. Lenders also take into consideration the levels of borrowers becoming delinquent on auto loans. As those move higher, so do rates, which makes qualifying for a loan more difficult, particularly for those with lower credit scores. The average rate on new car loans was 7.2 percent in March, according to Edmunds, a car shopping website, unchanged from February and March 2024. Rates for used cars were higher: The average loan carried an 11.5 percent rate in March, compared with 11.3 percent in February and 11.9 percent in March 2024. Where and how to shop: Once you establish your budget, get preapproved for a car loan through a credit union or bank (Capital One and Ally are two of the largest auto lenders) so you have a point of reference to compare financing available through the dealership, if you decide to go that route. Always negotiate on the price of the car (including all fees), not the monthly payments, which can obscure the loan terms and what you'll be paying in total over the life of the loan. Credit Cards What's happening now: The interest rates you pay on any balances that you carry had edged slightly lower after the most recent Fed cuts, but the decreases have slowed, experts said. Last week, the average interest rate on credit cards was 20.09 percent, according to Bankrate. Much depends, however, on your credit score and the type of card. Rewards cards, for instance, often charge higher-than-average interest rates. Where and how to shop: Last year, the Consumer Financial Protection Bureau sent up a flare to let people know that the 25 biggest credit-card issuers had rates that were eight to 10 percentage points higher than smaller banks or credit unions. For the average cardholder, that can add up to $400 to $500 more in interest a year. Consider seeking out a smaller bank or credit union that might offer you a better deal. Many credit unions require you to work or live someplace particular to qualify for membership, but some bigger credit unions may have looser rules. Before you make a move, call your current card issuer and ask them to match the best interest rate you've found in the marketplace that you've already qualified for. And if you do transfer your balance, keep a close eye on fees and what your interest rate would jump to once the introductory period expires. Mortgages What's happening now: Mortgage rates have been volatile. Rates peaked at about 7.8 percent late last year and had fallen as low as 6.08 percent in late September. Solid economic data and concerns about Mr. Trump's potentially inflationary agenda pushed rates a bit higher again, though they've steadied in recent weeks. Rates on 30-year fixed-rate mortgages don't move in tandem with the Fed's benchmark, but instead generally track with the yield on 10-year Treasury bonds, which are influenced by a variety of factors, including expectations about inflation, the Fed's actions and how investors react. The average rate on a 30-year fixed-rate mortgage was 6.76 percent as of May 1, down from 6.81 percent the previous week and 7.22 percent a year ago. Other home loans are more closely tethered to the central bank's decisions. Home-equity lines of credit and adjustable-rate mortgages — which carry variable interest rates — generally adjust within two billing cycles after a change in the Fed's rates. Where and how to shop: Prospective home buyers would be wise to get several mortgage rate quotes — on the same day, since rates fluctuate — from a selection of mortgage brokers, banks and credit unions. That should include: the rate you'll pay; any discount points, which are optional fees buyers can pay to 'buy down' their interest rate; and other items like lender-related fees. Look to the 'annual percentage rate,' which usually includes these items, to get an apples-to-apples comparison of your total costs across different loans. Just be sure to ask what's included in the A.P.R. Savings Accounts and C.D.s What's happening now: Everything from online savings accounts and certificates of deposit to money market funds tend to move in line with the Fed's policy. Savers are no longer benefiting from the juiciest yields, but you can still find returns at online banks of 4 percent or more. 'The Fed taking its foot off the gas with rate cuts means that these yields are likely to stay high for a while, but it won't last forever,' said Matt Schulz, chief consumer finance analyst at LendingTree, the online loan marketplace. Traditional commercial banks' yields, meanwhile, have remained anemic throughout this period of higher rates. The national average savings account rate was recently 0.61 percent, according to Bankrate. Where and how to shop: Rates are one consideration, but you'll also want to look at providers' history, minimum deposit requirements and any fees (high-yield savings accounts don't usually charge fees, but other products, like money market funds, do). part of LendingTree, tracks rates across thousands of institutions and is a good place to start comparing providers. Check out our colleague Jeff Sommer's columns for more insight into money-market funds. The yield on the Crane 100 Money Fund Index, which tracks the largest money-market funds, was 4.14 percent as of Tuesday, down from 5.15 percent in February 2024. Student Loans What's happening now: There are two main types of student loans. Most people turn to federal loans first. Their interest rates are fixed for the life of the loan, they're far easier for teenagers to get and their repayment terms are more generous. Current rates are 6.53 percent for undergraduates, 8.08 percent for unsubsidized graduate student loans and 9.08 percent for the PLUS loans that both parents and graduate students use. Rates reset on July 1 each year and follow a formula based on the 10-year Treasury bond auction in May. Private student loans are a bit of a wild card. Undergraduates often need a co-signer, rates can be fixed or variable and much depends on your credit score. Where and how to shop: Many banks and credit unions want nothing to do with student loans, so you'll want to shop around extensively, including with lenders that specialize in private student loans. You'll often see online ads and websites offering interest rates from each lender that can range by 15 percentage points or so. As a result, you'll need to give up a fair bit of information before getting an actual price quote.
