Recently we wrote about the growing popularity of British cars in the United States. Jaguar and Land Rover especially are seeing growth as the company produces high-quality cars and SUVs for a hungry American public.
How long would that hunger last, though, if costs of British luxury increased by about $17,000 per vehicle?
That could happen if the president’s plan to tax imports comes to fruition.
Automotive News published a story that said,
In what it calls a “thought exercise,” researcher Baum & Associates estimates most automakers would need to raise vehicle prices by thousands of dollars — more than $17,000 per vehicle in Jaguar Land Rover’s case, which imports all its vehicles — to recoup higher costs incurred by a proposed border-adjusted tax. Ford, with significant domestic manufacturing, would need to mull the smallest price hike among major automakers, at about $282 per vehicle, followed by General Motors at $995, according to the report.
All automakers that import vehicles, or parts, would be affected, including Honda, Nissan, Toyota, Volkswagen, Subaru, Mitsubishi, Mazda, Hyundai, Kia, and more. Increased costs for the smaller automakers, Mazda and Mitsubishi specifically, could be enough to kick them out of the market.
Many automakers are already considering plans to expand or build new facilities here to avoid the hefty tariffs. The tax would also encourage automakers to keep their U.S. plants running at the expense of facilities in Canada and Mexico.
There’s no guarantee that the new tax will come into existence. AutoNews pegs the odds at less than 50 percent, but if it does happen, it could put U.S. car buying on par with European countries that charge a hefty 15 percent Value Added Tax.
Automakers know, however, that increasing car prices would translate to fewer buyers, so they would most likely try to keep increased costs to a minimum. Prices may not rise $17,000, but they would most definitely increase, which could fuel a hot demand for used cars.
Used Jaguar, anyone?
Would you be willing to pay more for a car that wasn’t built in the United States?
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