Automakers provide stable pricing for now, but warn of future hikes

By Nora Eckert, Kalea Hall, David Shepardson

(Reuters) -Automakers are offering deals to anxious customers to ride a short-term surge in shopping, while also warning lawmakers that they will have to raise prices dramatically if tariffs remain in place for long. 

Chrysler parent Stellantis said on Friday it would extend its employee-discount program to the wider market on some new models, following a similar move from Ford Motor which was first reported by Reuters on Wednesday.

U.S. President Donald Trump's 25% tariffs on automotive imports, and a 10% baseline tariff on all imports, have sent car companies scrambling. 

Some automakers have responded to hefty levies on Mexican and Canadian imports by pausing operations there, leading to layoffs in the U.S. plants that supply them through an interconnected web of North American production. Others have added jobs to the U.S. to increase output domestically.

A temporary bright spot for dealers and automakers is a surge of vehicle purchases by tariff-wary shoppers. March sales increased on this uncertainty, and automakers are now looking to grab market share with a variety of incentives over the coming months.

“If you can actually get some consumers to defect, especially from brands that have extremely high levels of loyalty ... then you know you're not just buying this customer once. This incentive pays off potentially for a lifetime," said Ivan Drury, director of insights for Edmunds.

Matick Automotive Group dealer Paul Zimmermann saw sales at his General Motors and Toyota dealerships pick up at the end of March, with the overall group logging a year-over-year increase of about 15% in the first quarter.

“There for sure was just an uptick in leads, in foot traffic and in sales the last two weeks. We got a lot of anecdotal input feedback from folks that was a driver,” he said of the tariffs.

Japan's Nissan said this week it would reduce prices on its 2025 Rogue and 2025 Pathfinder to "boost affordability for customers facing a challenging car-buying landscape." Hyundai Motor committed to maintaining sticker prices on its current models through June 2.

General Motors as of Friday had not changed its April incentive offers, the company said.

While the short-term effects of tariffs have driven up sales, U.S. automakers have privately warned lawmakers that they will be forced to drastically raise prices if the tariffs remain in place.

Senate Commerce Committee Chair Ted Cruz said in his "Verdict with Ted Cruz" podcast on Friday that he spoke to one of the Detroit Three automakers,  who warned of large price hikes for U.S. vehicles starting around June as existing inventories are depleted. "The impact of these tariffs will be the prices, the average prices of all their cars will go up $4,500,” Cruz said he was told by the major U.S. automaker. "It's not just foreign cars that will go up."

Stellantis is giving shoppers the option of taking employee-incentive pricing, which slashes thousands of dollars off the vehicle, or accept current retail incentives.

"This week we launched aggressive and consistent incentive and marketing support for April, including an exciting and competitive enhancement that will allow our customers ‘America’s Freedom of Choice’ between employee price or current cash incentives," a Stellantis spokesperson said in a statement.

The Stellantis program covers 2024 model-year vehicles including popular Jeep, Ram and Dodge models, according to a memo seen by Reuters. The automaker said the program begins on Friday and runs through April 30. The Wall Street Journal earlier reported the news.

While surging auto sales are a temporary boon for dealers and automakers, healthy inventories will not last for months.

As of early April, automakers had an average of 48 days' supply on dealer lots, according to car-shopping website Edmunds. The Ford brand sat above the industry average, with 64 days, about the same as Stellantis' Jeep brand. The Chrysler brand had 15 days of supply, and Ram had a healthy 70 days. Nissan had 42 days, and Hyundai had 60 days.

(Reporting by Nora Eckert and Kalea Hall in Detroit and David Shepardson in Washington, Additional reporting by Nathan Gomes in Bengaluru; Editing by Krishna Chandra Eluri, Chizu Nomiyama and Matthew Lewis)