GM Not Planning to Raise Car Prices Despite Tariff Hit, CFO Says

0 3 minutes read

General Motors (GM) reported in second-quarter results on Tuesday that tariffs cost the company $1.1 billion. Despite that hit, the carmaker insists it will not pass the cost to consumers by raising prices on cars, which should be welcome news if you’re in the market for a new car.

“When you look at the first quarter, pricing was up; second quarter, pricing was essentially flat. But we’ve banked some of those gains, and that’s part of our 30% offset that we’ve talked about,” CFO Paul Jacobson said on CNBC’s Squawk Box.

“So we don’t expect any specific price increases related to tariffs, but certainly pricing and stability is important for us as we continue to manage our inventories with discipline and really drive the business for cash flows.”

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.

Profit and prosper with the best of expert advice – straight to your e-mail.

President Donald Trump instituted a 25% tariff on all imported cars and auto parts, with some particularities including that vehicles assembled in the U.S. are eligible for partial tariff rebates. The tariff went into effect in late spring.

While GM, which includes Chevrolet, Buick, GMC and Cadillac, has manufacturing sites in the U.S., the company also has other global operations. GM seems to be taking efforts to mitigate long-term impacts of tariffs: The company announced a $4 billion investment in U.S. manufacturing plants in June that will go in part towards the production of the gas-powered Chevrolet Blazer and Equinox, which are currently produced in Mexico, CNBC reported.

Looking ahead, GM plans to invest between $10 billion and $12 billion annually through 2027, with a focus on boosting U.S. production in key states: Orion Assembly in Michigan, Fairfax Assembly in Kansas and Spring Hill Assembly in Tennessee. This initiative is part of a larger strategy to improve operational efficiency and strengthen its manufacturing presence in the U.S.

On Squawk Box this week, CFO Jacobson reiterated that consistent pricing is a key component of GM’s strategy. So, whether you’re in the market for a new car or if you already own a GM car, the company aims to keep cars’ values and prices predictable.

“While we’ve seen a lot of heavy incentives from our competitors over the last few years, we’ve maintained a lot of pricing consistency,” he said. “And we think that’s important for our customers to make sure that they can count on us, but also to make sure that we’re watching and monitoring residual values, because our customers do hold on to these vehicles and want to make sure that they maintain their value.”

GM CFO Paul Jacobson: Not expecting any specific price increases related to tariffs – YouTube

Watch On

Overall, car prices have not gone up yet since tariffs were introduced, but discounts have started to become less generous, according to Kiplinger Letter managing editor Jim Patterson. He expects sticker prices will eventually rise by 4%-8%.

Another concern for car shoppers is that cheaper models — those in the $30,000 range — could become more scarce since they are often imported and have lower margins, Patterson reported. The battery-powered Chevrolet Equinox, which is in that price range, was the third best-selling electric vehicle in the U.S. year-to-date, GM reported in its earnings.

Keep in mind, there’s been a rush on EVs since the “big, beautiful” bill put an expiration date on EV tax credits. You can now only get a credit before September 30 of this year. Basically, whether you’re in the market for an electric, hybrid or gas-powered car, you may want to think about shopping sooner rather than later as these credits go away and tariffs come into play.

Source link