A key Toyota executive warns that price increases are growing more likely as unprecedented tariffs rock the auto industry.
To date, Toyota has not raised sticker prices to compensate for the new tariffs.
However, Toyota Motor North America Chief Operating Officer Mark Templin told Ward’s Auto this week that the tariffs are “not sustainable longer term without significant price increases, and the industry already has an affordability problem.”
Price Increases Modest So Far
The White House enacted a 25% tariff on cars imported into North America in early April. A month later, it followed with a 25% tariff on auto parts. It softened the parts tariff slightly with a scheme to reimburse automakers for some of the cost for the first two years.
Car prices have not risen by the full cost of the tariff immediately. The price of the average new car rose 2.5% in April. Used car prices also began to rise.
That’s true for several reasons.
Dealers have a backlog of cars imported at pre-tariff prices to sell before they have to pay the import fee on new inventory. That stockpile differs by automaker, with Toyota and its Lexus luxury brand having the smallest inventory.
Related: How Each Automaker Is Responding to Tariffs
Some companies have also pledged to keep prices low through June. Others have begun raising them. Ford recently announced price increases on several models. Subaru has announced that increases are coming.