New car tariffs have sent Americans shopping. Car shoppers are buying more new cars than they did a year ago, seeking to grab vehicles imported into the country at pre-tariff prices. But the effect may already be slowing from a fevered pace in March.
Analysts compare car sales using a metric called the Seasonally Adjusted Annual Rate (SAAR), which shows how many cars Americans would buy in a year at today’s sales pace, adjusted for normal seasonal highs and lows.
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Last year, Americans bought about 16 million cars, according to Kelley Blue Book parent company Cox Automotive. In March, the SAAR hit an astonishing 17.8 million. In April, Cox Automotive reports, the rate fell to 16.4 million. That’s 400,000 higher than last April.
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Most dealerships still have cars imported at pre-tariff prices on the lot. The number varies from brand to brand, with some showing as little as a month’s worth of cars in stock at the end of March and others holding nearly four months’ supply.
Dealers may raise prices before they run out of pre-tariff cars, as they need to prepare their own finances. For each pre-tariff vehicle they sell, they’ll have to pay the tariff on its replacement.
The shopping surge will likely fade as prices rise. Cox Automotive Senior Economist Charlie Chesbrough explains, “With economic concerns rising and consumer confidence declining, the outlook for new auto sales from here is more troubling. If current policy holds, prices in the new-vehicle market will be noticeably higher in the coming months as more costly products replace pre-tariff inventory.”