US car prices surge in April as tariffs spark buyer panic

New-vehicle prices in the United States surged in April, climbing 2.5% from March as consumers rushed to dealerships to beat expected hikes triggered by new tariffs on imported cars. The increase, reported by Cox Automotive’s Kelley Blue Book, more than doubled the typical March-to-April gain of 1.1% and marks the second-highest monthly rise in a decade, surpassed only by April 2020’s 2.7% jump during pandemic-related factory shutdowns.

For consumers, the price shock is a direct result of the Biden administration’s enforcement of 25% tariffs on vehicle imports from countries including Mexico and Canada. While most automakers have not yet increased list prices, shoppers are still paying more due to demand shifts and local dealer pricing adjustments.

“Even if the sticker doesn’t change, demand-driven pressure is pushing transaction prices up,” said Erin Keating, executive analyst at Cox.

Manufacturers hold steady, but dealers adjust upward

Despite the tariff headwinds, brands like Hyundai, Ford, and Stellantis are offering discounts and promotions to keep buyers engaged. However, Ford has quietly raised prices on select models made in Mexico, such as the Mustang Mach-E, Bronco Sport, and Maverick pickup, by as much as $2,000, according to a dealer notice seen by Reuters last week.

Sales incentives have helped prevent a broader pricing spiral for now. However, Cox reported that those incentives, measured as a percentage of the final sale price, have fallen to their lowest levels since summer 2024.

“There’s still strong support through consumer-incentive programs,” said Todd Szott, a partner at Szott Automotive Group, which operates Ford, Stellantis, and Toyota dealerships in the Detroit metro area. “Pricing is fairly stable at this point.”

Inventory shrinks as demand climbs

Cox Chief Economist Jonathan Smoke said in a recent industry briefing that the number of new cars on U.S. dealer lots is now below 2.6 million units. With sales accelerating and importers trimming shipments, supply could tighten even further, potentially driving prices up again in the coming months.

Paul Zimmermann, co-owner of Matick Automotive Group in Michigan, confirmed growing concerns over thinning inventories. “It’s running healthy right now,” he said, “but we need to make sure there’s no blip in the supply pipeline.”

Used-Car Prices Also On the Rise

The price surge isn’t limited to new cars. Cox’s Manheim Used Vehicle Value Index rose 4.9% in April compared to a year ago, reaching 208.2. Month-over-month, prices climbed 2.7%, indicating strong demand in the secondhand market as well.

Tariffs Could Push Prices Up to 15%

Cox previously estimated that vehicles directly affected by the 25% import tariff could eventually cost 10% to 15% more, while vehicles not subject to full tariffs might see prices increase by around 5%.

Keating noted that major price jumps are unlikely in the short term. However, she warned that automakers may use the summer model-year changeover to quietly adjust prices. “Over time, we might start seeing higher increases,” she added.

Read more on Trump’s 25% car tariff sparks global backlash, raises concerns for U.S. consumers