US tariffs will raise prices Down Under

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US tariffs will raise prices Down Under

 

Most of us find what’s going on in the USA at the moment quite confusing. We’re not taking a political stance on the tariff issue, but what’s clear is that US-sourced vehicles and automotive parts will become more expensive over coming months.

 

 

US-made utes and wagons have proved popular with many Australian buyers because of their undoubted towing ability and performance. These large vehicles are purpose-designed to tow heavy vans.

However, the US market for them is huge, so there’s no great inducement for US makers to go to the trouble of performing RHD engineering on them, to satisfy the tiny volumes of markets including South Africa and Australia. That’s why these vehicles are converted to RHD in Australia, but that dismantling and rebuilding operation is expensive – hence the already very high prices asked for Big Fords, RAMs and Chevys and GMCs.

The exception, of course, is Jeep, which has always had a sizeable RHD export component in its US-manufactured lineup.

If you’re in the market for an American vehicle, now is probably a good time to buy one, because they’re almost certain to go up in price this year.

But don’t look to the Tariffer-in-Chief for sympathy. Trump told NBC News in a March 29 interview that  he: “couldn’t care less” if automakers raised prices of imported vehicles because of new 25-percent tariffs on imported vehicles and vehicle parts.

“I hope they raise their prices, because if they do, people are gonna buy American-made cars,” Trump said in the interview: “We have plenty”.

Dare we suggest that he’s talking bollocks, because there isn’t a single US-made vehicle that a doesn’t have some imported raw materials and manufactured componentry, and that means even ‘US-made’ vehicles will suffer some price increases.

Take the Ford F-150 that, sure, is ‘made in the Goddam USA’, but its petrol V8 is produced in Windsor, Ontario – in Canada – and the diesel V8 option is made in Mexico. The F-150’s aluminium panels are pressed from Canadian (and possibly Australian) metal.

US auto industry estimates put likely price increases on ‘US-made’ vehicles at between US$4000 and US$10,000.

Those increased costs are likely to be passed on to buyers of US utes and wagon brands Down Under.

Also, the US major car makers – GM, Ford and Stellantis – have imported vehicles in their US lineups. GM brands’ import level is more than 45 percent of the range it offers US buyers, according to GlobalData.

Tariff-induced cost increases on these imported vehicles will have a negative effect on the profits of the Big 3, either through reduced margins to ensure sales volumes, or through reduced sales at higher pricing.

We’ve asked the local suppliers of RHD-converted utes and wagons for some price-change information, but it’s early days for everyone in this crazy new restrictive-trade environment, so we’ll get back to you when we know more.

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