July 2, 2025 • 16 mins
The auto sector saw buyers race to dealerships after President Trump announced 25% tariffs on car imports and parts from outside the US. And according to new data this week, sales from major automakers appear to be losing steam ahead of Trump’s July 9 tariff deadline.
Today on the Big Take, host David Gura sits down with Bloomberg’s Detroit bureau chief David Welch to break down how Trump’s trade war could impact car companies including Tesla, GM and Ford, and what that means for car buyers heading into the summer shopping season.
Read more: US Auto Sales Lose Steam After Tariff-Induced Shopping Spree
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
This week, virtually every major automaker posted sales numbers for
the second quarter of this year, and it's clear Americans
are still scrambling to buy cars before President Trump's tariffs
are finalized.
Speaker 1 (00:21):
For General Motors, Honda, all Head good Quarters, actually Toyota
did as well.
Speaker 2 (00:26):
David Welch is Bloomberg's Detroit bureau chief, and he's been
tracking that sales data closely. There were winners, David says,
and there were losers.
Speaker 1 (00:35):
Still And has had a tough quarter. Nissan had a
tough quarter. Both of them have had pre existing problems,
but they didn't seem to capitalize on consumers running the
dealerships as much as the others. And of course Tesla
down thirteen percent. Very tough quarter for that, David says.
Speaker 2 (00:48):
What we're seeing now with the auto industry is a
new chapter in a story that started a few years ago.
The reason for the price hike too few vehicles for
sale during the pandemic and too many buyers.
Speaker 1 (01:00):
How anybody can afford paying as much for a vehicle
or a truck as a.
Speaker 2 (01:04):
House, And that run up in prices has intensified because
of the ongoing trade.
Speaker 1 (01:09):
War, and what we're going to be doing is a
twenty five percent tariff on all cars that are not
made in the United States. If they're made in the
United States, is absolutely not terror.
Speaker 2 (01:19):
That was President Trump back in March. The introduction of
new tariffs started what David calls a buying bonanza. Americans
wanted to get their hands on a new ride before
prices got even higher. We're hearing reporting that a lot
of consumers are front running the implementation of these tariffs.
But what this week's figures show is that surge in
(01:41):
sales couldn't last forever.
Speaker 1 (01:43):
The storious consumers raced out to get ahead of the tariffs,
and they did just that. So you had a bonanza
for car companies in April and May, but you had
a hangover from it some payback in June when the
tariffs actually went into place and everyone who bought, not
everyone put a lot of people who bought had already
gotten their car and didn't need to go, and so
you saw sales really geared down that last month.
Speaker 2 (02:11):
I'm David Gera and this is the big take from
Bloomberg News today on the show. It's a nobody's market
in cars. Why consumers, dealers, and manufacturers are all bracing
for tougher times ahead. What that means for you if
you're in the market for a new car this summer.
(02:32):
Right after the largest car makers reported sales numbers for
the second quarter this year, for April, May and June,
I sat down with Bloomberg's David Welch. Before we dug
into the details, I asked him for the big picture
on those reports.
Speaker 1 (02:45):
It was a pretty solid quarter. Actually, you had a
lot of people racing to buy cars in April and
May to get ahead of tariffs that were going to
be put in place. Those people did manage to avoid
some extra costs from that, and then you had to
pay back in June. Some companies were down, some companies
were up just a little. So it tells you that
people once they got the cars they needed and the
(03:08):
tariffs came out, there us a big payback for all
of that bonanza buying that went on early in the quarter.
Speaker 2 (03:13):
So it's not a stretch to say, looking at these
sales data that this is a tariff's story.
Speaker 1 (03:18):
It is. You know, consumers aren't dumb. I think Trump
put in a lot of tariffs in place on different
goods in his first term, and I remember when you
put tariffs on the EU. I remember seeing people running
out to buy wine because it was sort of publicly
out there that French and Italian wines were going to
get hit with tariffs. And so it makes more sense
(03:39):
with a big purchase than it does with a bottle
of wine because depending on what the car companies are
going to try to pass through. But you put five
percent down an average price of a vehicle close to
fifty thousand dollars, that's real money.
Speaker 2 (03:51):
David, I confess, as a journalist who covers this day
in the day out, it is hard to keep track
of what tariffs are in place, what have been put
on pause, what may or may not be coming down
the line. Can you just describe the trade environment that
car manufacturers are having to deal with right now.
Speaker 1 (04:08):
Yeah, it's tough. So the big ones with this market,
I should say the most common ones would be Mexico
and Canada. So you've got some big tariffs on the
non US content in those cars. So if the cars
themselves were made with a certain amount of parts that
are either made in the US or made at a
(04:29):
certain wage, level. Then they qualify for USMCA. They come
over here with a minimal tariff, but the parts in
them that were not made in the US, there's still
a terrify on those. To vehicles made in Korea, made
in Japan, made in Canada or Mexico get hit with
some pretty big tariffs. You haven't seen companies pass along
a lot of that cost yet. They've been sneaking in
(04:52):
some price increases or just cutting some of the discounting, rebating,
zero percent financing deals that they had in the months
leading up to implementation the terrors, But right now they're
basically eating it out of their bottom line. So second
quarter earnings will be very interesting for a lot of
these companies, and I think the reason they're doing that
is they're waiting to see what happens with trade negotiations.
(05:13):
You know that there's the whole you know, Taco Trump
always chickens out, So there's there's that. And also if
you're General Motors, Hundai, Kia, or Toyota, you're not going
to make any big change. Go wait and see what
trade deal comes out.
Speaker 2 (05:26):
I'd love to shift from what manufacturers are doing to
how consumers are doing in this moment. So I'm interested
in the consumer psychology of car buying in this in
this environment. What are they dealing with and you mentioned
that buying bonanza a few minutes ago. How are they
dealing yes, with these tariffs, but also with higher interest
rates and kind of the broader economic environments challenges.
Speaker 1 (05:50):
Oh, that's a big problem. Affordability has been an issue
in the auto industry for a while. And what happened
during COVID semiconductor shortage is you have had shortage vehicles,
so the car companies just got rid of all discounts.
They were steadily raising the sticker price on vehicles and
the dealers wouldn't In some cases were gouging, but in
(06:10):
most cases the dealers didn't have to bargain because they
didn't have a lot of inventories. They sold them at
sticker price. And what the auto industry discovered was if
they made fewer vehicles and sold them at higher prices
and paid fewer people to do it, their profits were better.
And they've tried pretty hard to stick to that ever since.
So bottom line is, even if car companies wanted to
(06:31):
push price increases in in order to make up for
what they're losing on tariffs. It's really hard to do
it because consumers are already beset by high interest rate,
high prices, and they're kind of pushed to the limit.
Speaker 2 (06:42):
Yeah, this driver of a twenty fifteen Honda Odyssey was
surprised to see the average price of a new car
is forty eight forty eight thousand dollars. I mean, there
have been substantial increases.
Speaker 1 (06:52):
It seems the used car market is not the great
refuge that it was in years prior. So if you
need to drive, is our spend more when you go
buy it or just keep paying the repair shop and
keep it going until maybe something breaks.
Speaker 2 (07:09):
What story are we we being told by these companies
about the state that they're in right now.
Speaker 1 (07:13):
Ford had a good quarter, although it was against a
pretty weak comparison a year ago because they had some
production issues, but they had solid numbers. How ahead, a
pretty good quarter. They've been really gaining market surely. General
Motors has been gaining a fair amount of market Sharely
that was the bugbear for the company for decades. They're
(07:34):
selling a lot of evs. They've vowed that they're not
going to put in price increases. Well, they're dealing with
these tariffs and they're going to start building more vehicles
in the US, So I think they see an opportunity
to if they keep their prices where they are, continue
to pick up market share while others are maybe a
sneaky way taking away some of the discounts. And because
(07:56):
they know some of their competitors are, particularly Toyota, are
more exposed to tarifs in there, you do have your
laggers here. Stillantis and Nissan continue to struggle. They're having problems.
Speaker 2 (08:09):
We haven't talked about Tesla yet, and that company reported
sales numbers on Wednesday morning, global sales down thirteen percent
from a year ago. As you look at those numbers,
is the story they tell? A similar one, a unique one.
How should we think about Tesla in the context of
the broader car market.
Speaker 1 (08:27):
I think Tesla's story here is pretty unique. They have, frankly,
a pretty stale product line. And that's not me writing
cover views about Tesla saying I think the cars are stale.
The model Y is pretty fresh, and it just hasn't
really given them the big sales boost that they need
to stave off this decline. So if you look at
the four models that Tesla sells the most of the
(08:50):
models Sedan Model X kind of a crossover. It should
be Model three's they're smaller Sedan, Model Y. They're sort
of stylistically different sizes of the same sausage. Right, So
even though there's a new model Wine it's got some
better technology and so forth, it doesn't tell consumers that
there's something really new here. You also have the cyber
(09:10):
truck that's clearly a niche vehicle, one because it's expensive,
and two because it's it's a stylistic oddity, let's face it.
So that has moved the needle for them, and they
haven't gotten out the really inexpensive tesla that they've been
talking about, the Model two. So they're kind of stuck
in this situation where they've got a pretty stale lineup.
Speaker 2 (09:34):
After the break, What this slowdown in sales signals for
manufacturers and what potential car buyers might expect to see
as tariffs hit company's bottom lines. As cars have gotten
(09:56):
more expensive, car makers have relied on incentive. A big
one has been a tax credit for electric vehicles that
was part of the Inflation Reduction Act. A seventy five
hundred dollars tax credit, that's been in place since twenty
twenty two, but the Senate version of the Tax and
Spending Bill does away with it. Bloomberg's David Welch says
(10:17):
that poses a real threat to an industry that's already vulnerable.
Speaker 1 (10:21):
In China, you've got BYD and the domestic car companies
with very good electric vehicles really surging, and the European
automakers themselves have good evs and do pretty well competition
stuff there In North America, Ford had a particularly terrible
quarter in EV sales, but General Motors is coming out strong.
Hyundai and Kia are both very competitive and have good product.
It's not the oligopoli or near monopoly that Tesla had
(10:44):
five or six years ago in the US market. You know,
there's something else obviously going on, which the politics of Elon,
and I've seen some research that suggests that as high
as eighty percent of ED buyers are let's call it
somewhere left of center politically. They're not going to buy
a vehicle from Tesla because of you. Not every one
(11:04):
of them, not everybody really follows what the CEO does.
But Elon was actually working with the administration, and I
think he did turn away a lot of buyers, and
that's really hurt them.
Speaker 2 (11:13):
What would that mean just quickly for these car makers?
And you and I have talked before about the challenges
facing car makers who make up electric vehicles. If that
tax credit is phased out, as it is in the
Senate version of this bill, what does that mean for
a GM, for a forward, for companies that have more
than dabbled in in electric vehicles lately.
Speaker 1 (11:32):
Look, it's really tough. You know, this is a seventy
five hundred dollar tax incentive. Not every vehicle qualifies, but
I think the ones that would be affected by this
the most to the buyers who are most sensitive. So
you take something like a Chevy Equinox. That's GM's fastest
growing electric vehicle. You can get in one for thirty
five thousand dollars and it gets over three hundred miles
of range and it's a pretty nice little vehicle. And
(11:55):
right now I think that's, you know, that's the vehicle
for the non rich person who wants to go electric.
That vehicle was twenty seven to five after the tax credit.
Now it's back up to thirty five thousand dollars. General
Motors is racing to reduce costs for its electric vehicles.
Everybody is because the vehicles themselves are going to have
to stand on their own two feet in the marketplace
(12:17):
sell based on the price, and the company are going
to have to either reduce losses or try to make
money on them.
Speaker 2 (12:23):
There was an ominous line in our coverage I'll quote
from it. With already high car prices expected to rise
further as automakers manage billions of dollars in tariff costs,
it may only get worse from here. What does the
forecast look like for the second half of twenty twenty five.
Speaker 1 (12:39):
It's not good. The most of the forecasters are looking
for even more payback than we saw in June, because
there was some buying ahead in those months. But also
I think what a lot of them are looking at
is we could get more clarity in the second half
on tariffs, and clearly Trump is to keep some tariffs
(13:01):
in place. So let's say he gets a deal with
Japan and Korea. Maybe it's not fifty percent, but maybe
it's ten or fifteen percent, and then the companies will
start to adjust to that. They can't move production immediately,
so maybe they start raising prices. And parts makers also
start raising prices and eventually they try to push this
through to consumers. I thought General Motors moved to invest
(13:23):
four billion dollars and move production to the US from
Mexico was instructive in the sense that they've got people
talking directly to Trump himself and the Trump administration. So
I'm not saying they've got a perfect read on what
Trump's going to do, because he's very unpredictable, but they
got enough of a read on the permanence I think
(13:45):
of these tariffs, and to announce this four billion dollar
investment in moving a lot of production back from Mexico
that's going to take in two or three years to do,
that tells me that the Trump administration said, yeah, we're
keeping this stuff in place, so deal with it, and
that's how they're dealing with it.
Speaker 2 (14:03):
If you look at all of these manufacturers and how
they operate, are there ones that are better positioned to
weather these tariffs than others? And I guess vice versa.
Are there those who stand to have more trouble than
other manufacturers.
Speaker 1 (14:16):
I think Honda and Ford are very well positioned for this.
GM They've got a problem. Almost half their sales came
from someplace else. Toyto's got heavy tariff exposure here because
they get about half of their sales coming from Japan,
and they look the Europeans even you know, they had
moved a lot of production to Mexico for proximity and
(14:37):
because of USMCA, but that's all been kind of blown up.
Speaker 2 (14:41):
As these tariffs come into effect and stay to effect,
are consumers going to be aware of how high they
are and how they're affecting the prices? In other words,
I think back on when there was that minor tempest
involving Amazon where they were going to list how much
prices were up because of tariffs. Are car company is
going to do something similar? Do you think are we
going to see on a bill of sale for instance
X In addition, because of the way that these tariffs
(15:03):
are affecting the bottom line at these companies, I.
Speaker 1 (15:05):
Don't think they'll have that kind of transparency into it.
What consumers will just notice is they were shopping for
some vehicle a couple months ago, and they look now
and it's even more expensive where they tend to pick up.
Most of this is basically news reports reported by US,
reported by our competitors, and reported on TV that prices
(15:26):
have gone up, and even if they don't know the
exact amount, they just know that broadly speaking, cars have
gotten expensive and that they've got to either put off
that purchase or go out and buy something before it
gets even worse. And then they start to really do
their research.
Speaker 2 (15:42):
This is the Big Take from Bloomberg News. I'm David Gera.
To get more from The Big Take and unlimited access
to all of Bloomberg dot com, subscribe today at Bloomberg
dot com slash podcast offering. If you like this episode,
make sure to follow and review The Big Take wherever
you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back tomorrow
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
This week, virtually every major automaker posted sales numbers for
the second quarter of this year, and it's clear Americans
are still scrambling to buy cars before President Trump's tariffs
are finalized.
Speaker 1 (00:21):
For General Motors, Honda, all Head good Quarters, actually Toyota
did as well.
Speaker 2 (00:26):
David Welch is Bloomberg's Detroit bureau chief, and he's been
tracking that sales data closely. There were winners, David says,
and there were losers.
Speaker 1 (00:35):
Still And has had a tough quarter. Nissan had a
tough quarter. Both of them have had pre existing problems,
but they didn't seem to capitalize on consumers running the
dealerships as much as the others. And of course Tesla
down thirteen percent. Very tough quarter for that, David says.
Speaker 2 (00:48):
What we're seeing now with the auto industry is a
new chapter in a story that started a few years ago.
The reason for the price hike too few vehicles for
sale during the pandemic and too many buyers.
Speaker 1 (01:00):
How anybody can afford paying as much for a vehicle
or a truck as a.
Speaker 2 (01:04):
House, And that run up in prices has intensified because
of the ongoing trade.
Speaker 1 (01:09):
War, and what we're going to be doing is a
twenty five percent tariff on all cars that are not
made in the United States. If they're made in the
United States, is absolutely not terror.
Speaker 2 (01:19):
That was President Trump back in March. The introduction of
new tariffs started what David calls a buying bonanza. Americans
wanted to get their hands on a new ride before
prices got even higher. We're hearing reporting that a lot
of consumers are front running the implementation of these tariffs.
But what this week's figures show is that surge in
(01:41):
sales couldn't last forever.
Speaker 1 (01:43):
The storious consumers raced out to get ahead of the tariffs,
and they did just that. So you had a bonanza
for car companies in April and May, but you had
a hangover from it some payback in June when the
tariffs actually went into place and everyone who bought, not
everyone put a lot of people who bought had already
gotten their car and didn't need to go, and so
you saw sales really geared down that last month.
Speaker 2 (02:11):
I'm David Gera and this is the big take from
Bloomberg News today on the show. It's a nobody's market
in cars. Why consumers, dealers, and manufacturers are all bracing
for tougher times ahead. What that means for you if
you're in the market for a new car this summer.
(02:32):
Right after the largest car makers reported sales numbers for
the second quarter this year, for April, May and June,
I sat down with Bloomberg's David Welch. Before we dug
into the details, I asked him for the big picture
on those reports.
Speaker 1 (02:45):
It was a pretty solid quarter. Actually, you had a
lot of people racing to buy cars in April and
May to get ahead of tariffs that were going to
be put in place. Those people did manage to avoid
some extra costs from that, and then you had to
pay back in June. Some companies were down, some companies
were up just a little. So it tells you that
people once they got the cars they needed and the
(03:08):
tariffs came out, there us a big payback for all
of that bonanza buying that went on early in the quarter.
Speaker 2 (03:13):
So it's not a stretch to say, looking at these
sales data that this is a tariff's story.
Speaker 1 (03:18):
It is. You know, consumers aren't dumb. I think Trump
put in a lot of tariffs in place on different
goods in his first term, and I remember when you
put tariffs on the EU. I remember seeing people running
out to buy wine because it was sort of publicly
out there that French and Italian wines were going to
get hit with tariffs. And so it makes more sense
(03:39):
with a big purchase than it does with a bottle
of wine because depending on what the car companies are
going to try to pass through. But you put five
percent down an average price of a vehicle close to
fifty thousand dollars, that's real money.
Speaker 2 (03:51):
David, I confess, as a journalist who covers this day
in the day out, it is hard to keep track
of what tariffs are in place, what have been put
on pause, what may or may not be coming down
the line. Can you just describe the trade environment that
car manufacturers are having to deal with right now.
Speaker 1 (04:08):
Yeah, it's tough. So the big ones with this market,
I should say the most common ones would be Mexico
and Canada. So you've got some big tariffs on the
non US content in those cars. So if the cars
themselves were made with a certain amount of parts that
are either made in the US or made at a
(04:29):
certain wage, level. Then they qualify for USMCA. They come
over here with a minimal tariff, but the parts in
them that were not made in the US, there's still
a terrify on those. To vehicles made in Korea, made
in Japan, made in Canada or Mexico get hit with
some pretty big tariffs. You haven't seen companies pass along
a lot of that cost yet. They've been sneaking in
(04:52):
some price increases or just cutting some of the discounting, rebating,
zero percent financing deals that they had in the months
leading up to implementation the terrors, But right now they're
basically eating it out of their bottom line. So second
quarter earnings will be very interesting for a lot of
these companies, and I think the reason they're doing that
is they're waiting to see what happens with trade negotiations.
(05:13):
You know that there's the whole you know, Taco Trump
always chickens out, So there's there's that. And also if
you're General Motors, Hundai, Kia, or Toyota, you're not going
to make any big change. Go wait and see what
trade deal comes out.
Speaker 2 (05:26):
I'd love to shift from what manufacturers are doing to
how consumers are doing in this moment. So I'm interested
in the consumer psychology of car buying in this in
this environment. What are they dealing with and you mentioned
that buying bonanza a few minutes ago. How are they
dealing yes, with these tariffs, but also with higher interest
rates and kind of the broader economic environments challenges.
Speaker 1 (05:50):
Oh, that's a big problem. Affordability has been an issue
in the auto industry for a while. And what happened
during COVID semiconductor shortage is you have had shortage vehicles,
so the car companies just got rid of all discounts.
They were steadily raising the sticker price on vehicles and
the dealers wouldn't In some cases were gouging, but in
(06:10):
most cases the dealers didn't have to bargain because they
didn't have a lot of inventories. They sold them at
sticker price. And what the auto industry discovered was if
they made fewer vehicles and sold them at higher prices
and paid fewer people to do it, their profits were better.
And they've tried pretty hard to stick to that ever since.
So bottom line is, even if car companies wanted to
(06:31):
push price increases in in order to make up for
what they're losing on tariffs. It's really hard to do
it because consumers are already beset by high interest rate,
high prices, and they're kind of pushed to the limit.
Speaker 2 (06:42):
Yeah, this driver of a twenty fifteen Honda Odyssey was
surprised to see the average price of a new car
is forty eight forty eight thousand dollars. I mean, there
have been substantial increases.
Speaker 1 (06:52):
It seems the used car market is not the great
refuge that it was in years prior. So if you
need to drive, is our spend more when you go
buy it or just keep paying the repair shop and
keep it going until maybe something breaks.
Speaker 2 (07:09):
What story are we we being told by these companies
about the state that they're in right now.
Speaker 1 (07:13):
Ford had a good quarter, although it was against a
pretty weak comparison a year ago because they had some
production issues, but they had solid numbers. How ahead, a
pretty good quarter. They've been really gaining market surely. General
Motors has been gaining a fair amount of market Sharely
that was the bugbear for the company for decades. They're
(07:34):
selling a lot of evs. They've vowed that they're not
going to put in price increases. Well, they're dealing with
these tariffs and they're going to start building more vehicles
in the US, So I think they see an opportunity
to if they keep their prices where they are, continue
to pick up market share while others are maybe a
sneaky way taking away some of the discounts. And because
(07:56):
they know some of their competitors are, particularly Toyota, are
more exposed to tarifs in there, you do have your
laggers here. Stillantis and Nissan continue to struggle. They're having problems.
Speaker 2 (08:09):
We haven't talked about Tesla yet, and that company reported
sales numbers on Wednesday morning, global sales down thirteen percent
from a year ago. As you look at those numbers,
is the story they tell? A similar one, a unique one.
How should we think about Tesla in the context of
the broader car market.
Speaker 1 (08:27):
I think Tesla's story here is pretty unique. They have, frankly,
a pretty stale product line. And that's not me writing
cover views about Tesla saying I think the cars are stale.
The model Y is pretty fresh, and it just hasn't
really given them the big sales boost that they need
to stave off this decline. So if you look at
the four models that Tesla sells the most of the
(08:50):
models Sedan Model X kind of a crossover. It should
be Model three's they're smaller Sedan, Model Y. They're sort
of stylistically different sizes of the same sausage. Right, So
even though there's a new model Wine it's got some
better technology and so forth, it doesn't tell consumers that
there's something really new here. You also have the cyber
(09:10):
truck that's clearly a niche vehicle, one because it's expensive,
and two because it's it's a stylistic oddity, let's face it.
So that has moved the needle for them, and they
haven't gotten out the really inexpensive tesla that they've been
talking about, the Model two. So they're kind of stuck
in this situation where they've got a pretty stale lineup.
Speaker 2 (09:34):
After the break, What this slowdown in sales signals for
manufacturers and what potential car buyers might expect to see
as tariffs hit company's bottom lines. As cars have gotten
(09:56):
more expensive, car makers have relied on incentive. A big
one has been a tax credit for electric vehicles that
was part of the Inflation Reduction Act. A seventy five
hundred dollars tax credit, that's been in place since twenty
twenty two, but the Senate version of the Tax and
Spending Bill does away with it. Bloomberg's David Welch says
(10:17):
that poses a real threat to an industry that's already vulnerable.
Speaker 1 (10:21):
In China, you've got BYD and the domestic car companies
with very good electric vehicles really surging, and the European
automakers themselves have good evs and do pretty well competition
stuff there In North America, Ford had a particularly terrible
quarter in EV sales, but General Motors is coming out strong.
Hyundai and Kia are both very competitive and have good product.
It's not the oligopoli or near monopoly that Tesla had
(10:44):
five or six years ago in the US market. You know,
there's something else obviously going on, which the politics of Elon,
and I've seen some research that suggests that as high
as eighty percent of ED buyers are let's call it
somewhere left of center politically. They're not going to buy
a vehicle from Tesla because of you. Not every one
(11:04):
of them, not everybody really follows what the CEO does.
But Elon was actually working with the administration, and I
think he did turn away a lot of buyers, and
that's really hurt them.
Speaker 2 (11:13):
What would that mean just quickly for these car makers?
And you and I have talked before about the challenges
facing car makers who make up electric vehicles. If that
tax credit is phased out, as it is in the
Senate version of this bill, what does that mean for
a GM, for a forward, for companies that have more
than dabbled in in electric vehicles lately.
Speaker 1 (11:32):
Look, it's really tough. You know, this is a seventy
five hundred dollar tax incentive. Not every vehicle qualifies, but
I think the ones that would be affected by this
the most to the buyers who are most sensitive. So
you take something like a Chevy Equinox. That's GM's fastest
growing electric vehicle. You can get in one for thirty
five thousand dollars and it gets over three hundred miles
of range and it's a pretty nice little vehicle. And
(11:55):
right now I think that's, you know, that's the vehicle
for the non rich person who wants to go electric.
That vehicle was twenty seven to five after the tax credit.
Now it's back up to thirty five thousand dollars. General
Motors is racing to reduce costs for its electric vehicles.
Everybody is because the vehicles themselves are going to have
to stand on their own two feet in the marketplace
(12:17):
sell based on the price, and the company are going
to have to either reduce losses or try to make
money on them.
Speaker 2 (12:23):
There was an ominous line in our coverage I'll quote
from it. With already high car prices expected to rise
further as automakers manage billions of dollars in tariff costs,
it may only get worse from here. What does the
forecast look like for the second half of twenty twenty five.
Speaker 1 (12:39):
It's not good. The most of the forecasters are looking
for even more payback than we saw in June, because
there was some buying ahead in those months. But also
I think what a lot of them are looking at
is we could get more clarity in the second half
on tariffs, and clearly Trump is to keep some tariffs
(13:01):
in place. So let's say he gets a deal with
Japan and Korea. Maybe it's not fifty percent, but maybe
it's ten or fifteen percent, and then the companies will
start to adjust to that. They can't move production immediately,
so maybe they start raising prices. And parts makers also
start raising prices and eventually they try to push this
through to consumers. I thought General Motors moved to invest
(13:23):
four billion dollars and move production to the US from
Mexico was instructive in the sense that they've got people
talking directly to Trump himself and the Trump administration. So
I'm not saying they've got a perfect read on what
Trump's going to do, because he's very unpredictable, but they
got enough of a read on the permanence I think
(13:45):
of these tariffs, and to announce this four billion dollar
investment in moving a lot of production back from Mexico
that's going to take in two or three years to do,
that tells me that the Trump administration said, yeah, we're
keeping this stuff in place, so deal with it, and
that's how they're dealing with it.
Speaker 2 (14:03):
If you look at all of these manufacturers and how
they operate, are there ones that are better positioned to
weather these tariffs than others? And I guess vice versa.
Are there those who stand to have more trouble than
other manufacturers.
Speaker 1 (14:16):
I think Honda and Ford are very well positioned for this.
GM They've got a problem. Almost half their sales came
from someplace else. Toyto's got heavy tariff exposure here because
they get about half of their sales coming from Japan,
and they look the Europeans even you know, they had
moved a lot of production to Mexico for proximity and
(14:37):
because of USMCA, but that's all been kind of blown up.
Speaker 2 (14:41):
As these tariffs come into effect and stay to effect,
are consumers going to be aware of how high they
are and how they're affecting the prices? In other words,
I think back on when there was that minor tempest
involving Amazon where they were going to list how much
prices were up because of tariffs. Are car company is
going to do something similar? Do you think are we
going to see on a bill of sale for instance
X In addition, because of the way that these tariffs
(15:03):
are affecting the bottom line at these companies, I.
Speaker 1 (15:05):
Don't think they'll have that kind of transparency into it.
What consumers will just notice is they were shopping for
some vehicle a couple months ago, and they look now
and it's even more expensive where they tend to pick up.
Most of this is basically news reports reported by US,
reported by our competitors, and reported on TV that prices
(15:26):
have gone up, and even if they don't know the
exact amount, they just know that broadly speaking, cars have
gotten expensive and that they've got to either put off
that purchase or go out and buy something before it
gets even worse. And then they start to really do
their research.
Speaker 2 (15:42):
This is the Big Take from Bloomberg News. I'm David Gera.
To get more from The Big Take and unlimited access
to all of Bloomberg dot com, subscribe today at Bloomberg
dot com slash podcast offering. If you like this episode,
make sure to follow and review The Big Take wherever
you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back tomorrow
Hosts And Creators
Sarah Holder
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