The cost of a new vehicle is creeping up — and the pace of sales is slowing — as automakers adjust pricing strategies to try to absorb tariff costs while preserving market share and profits.
As the reality of tariffs sets in, many manufacturers are framing price increases carefully to avoid backlash from President Donald Trump, who recently slammed Walmart on social media for telling investors that “higher tariffs will result in higher prices.”
Automakers also don’t want to draw attention to tariffs because consumers might assume prices are higher than they are.
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“There is a risk that people will automatically assume the price increase is 25 percent versus a 2 percent increase,” Jessica Caldwell, Edmunds’ head of insights, told Automotive News.
“Consumers have these numbers pre-assigned in their brain from the news, but the automakers won’t generally pass on the whole amount — at least not in the beginning,” she said.
Automakers can try to minimize the price hikes or mask them with stingier incentives or content packages. But there’s no way to avoid — or fully absorb — the extra costs, said Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions.
“Tariffs are going to cost buyers eventually, even on domestically sourced vehicles,” Fiorani said.
“The best way to hide price increases is decontenting models,” he said. “Removing standard features, especially ones that require imported components, will keep costs down while the pricing remains flat.” Less expensive speakers or a smaller touchscreen might hide the cost increases, he added.
Car prices started to rise in February
New-vehicle prices increased sharply after the pandemic triggered a microchip shortage that crimped supply.
Prices reached a 12-month high last June and then reversed course, a reflection of supply and demand coming into better balance, Rick Wainschel, vice president of data science and analytics for Cloud Theory, told Automotive News. But they remained elevated.
“We still saw such high prices at the end of last year, and then they started to come down,” Wainschel said.
The data provider tracks the average marketed price, defined as the retail price less any dealer discounts and manufacturer incentives that are advertised online.
The average marketed price of a new vehicle in late February fell to $48,544, the lowest since October 2022, according to Cloud Theory.
“That’s when tariff uncertainty started to rear its head, and prices started to go up for the next couple of months,” Wainschel said.
To blunt tariff chaos in the market, several manufacturers committed to not raising prices. For example, Hyundai and Genesis said they would hold the line until June 2. Ford advertised employee pricing for all shoppers, a discount still on offer until the July 4 weekend.
Ford and Lincoln sales jumped a combined 16 percent in May, even as the industrywide pace of sales slowed to a 15.3 million seasonally adjusted annual rate, down from 16.1 million a year earlier. The selling rate topped 17 million in March and April.
Promotions by Ford, Stellantis and others softened prices for a while, Wainschel said, but prices started to rise again following the Memorial Day weekend. By June 3, the average marketed price exceeded $50,000. By June 5, it was within $50 of the May 3 peak, which was the highest average marketed price since Sept. 7.
Automakers don’t want to stoke the ire of the White House
“Now manufacturers are starting to raise prices, but they are not doing it in an in-your-face way,” Wainschel said. “Anything perceived as calling out the trade policy as problematic stokes the ire of the White House.”
Automakers are leveraging existing price pressures such as model-year changeovers, market dynamics or general inflation, as scapegoats for rising sticker prices.
Subaru increased pricing across its lineup by an average of 4.2 percent from November to May, according to Edmunds. It attributed the change to “current market conditions.” In May, Subaru sales fell 10 percent — ending the automaker’s streak of 33 consecutive U.S. monthly sales gains.
Caldwell said the base trim level for the Forester crossover didn’t change, but some of the BRZ trim levels went up by 6 percent.
Volvo, which makes only one vehicle in the U.S., the EX90, is increasing prices by about 4 percent on 2026 model vehicles. A spokeswoman for the brand said price changes account for “significant upgrades to in-car technology across our lineup” as well as “current market conditions.”
BMW told retailers it will increase prices on most 2026 models by 1.9 percent to account for inflation and new equipment.
Mercedes-Benz has said it will not raise prices on 2025 model vehicles . But 2026 model vehicles will likely have a “3 to 5 percent price increase, with a higher percentage for top-end models,” a person briefed on the matter told Automotive News. A Mercedes spokesman declined to comment on 2026 prices.
Tariff exposure will determine manufacturers’ pricing strategies
“Manufacturers’ approaches are somewhat dependent on their tariff exposure, and they’re acting accordingly,” Wainschel said.
Mazda makes only one vehicle in the U.S., the CX-50, and although it has stopped shipping those vehicles to Canada, capacity is maxed out at the factory where it’s built in Alabama.
Despite U.S. assembly, the CX-50 sources a lot of Japanese parts, which are subject to 25 percent tariffs. All six of the other vehicles in Mazda’s lineup are imported from Japan and facing 25 percent tariffs.
A spokesperson for the brand said it has not announced price increases, but a dealer who asked not to be identified said Mazda is starting to cut expenses elsewhere, such as on incentives and preferred vendors.
“Mazda said it would hold out on raising MSRPs for as long as possible, and that a year was likely its threshold,” the dealer said. “We expect a standard percentage increase across the lineup at some point.”
Nissan is leaning into sales of its three-row Pathfinder and top-selling Rogue compact crossover, which are both built at its plant in Tennessee.
Between May 4 and June 3, Rogue inventory rose 5 percent while sales, or “movement,” jumped 8 percent, according to Cloud Theory.
In the same period, Pathfinder inventory increased 3 percent, and movement soared 86 percent.
“Nissan is choosing to emphasize these two models because they have lower tariffs and a higher margin so they are able to play with pricing, incentives and discounting in order to take a smaller hit because with Versa, Sentra and Altima they have to take the tariffs into account,” Wainschel said.
Automakers and suppliers run on thin margins
Tariff costs will be distributed across the value chain from suppliers to customers.
“That’s why we’re seeing smaller 2 percent to 3 percent increases — so automakers can see what happens” in the market, Caldwell said.
If prices go up too much, consumers may delay new-vehicle purchases or seek alternative transportation. Similarly, suppliers can absorb only so much cost.
“Some of the suppliers run on thinner margins than automakers, especially when you get down to Tier 2 or 3 suppliers,” she said.
Fiorani agreed.
“Automobile production does not include profit margins wide enough to clear substantial tariffs and keep the prices the same,” he said.
Urvaksh Karkaria contributed to this report.
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