ilmscore | Car Market Update 2025 – Get Ready for Higher Prices from Tariffs

Car Market Update 2025 – Get Ready for Higher Prices from Tariffs

Published: 2025-08-27
Status: Available | Analyzed

Predictions from this Video

Total: 7
Correct: 4
Incorrect: 1
Pending: 2
Unrated: 0
Prediction
Topic
Status
The tax deduction for interest on auto loans for US-made cars will only apply to loans originated after December 31, 2024.
"This is going to apply to auto loans that originated after December 31st of 2024."
US
Pending
The percentage of 7-year auto loans is predicted to break new highs in 2025, indicating continued consumer financial strain.
"Consumers were hurting before the pandemic, and it was going up beforehand. However, there was a spike in 7-year auto loans during the pandemic. And if you notice, it's breaking new highs in 2025."
Auto Loans
Pending
The Federal Reserve is highly likely (89% probability) to start cutting interest rates in September, with a strong possibility of doing so in October if not in September. The overall expectation is for rate cuts to begin sooner rather than later.
"But one thing to note is that the Federal Reserve is planning on cutting interest rates soon. So there's a high probability that they're going to start doing that, cutting interest rates in September. So the market odds are currently at 89%. But if they don't start cutting interest rates in September, then there's a good shot of them doing it in October. So, they're going to start cutting interest rates sooner or later, but most likely sooner."
Interest Rates
Incorrect
Due to ongoing inflation concerns, interest rate cuts are anticipated to be implemented at a slow pace.
"But with inflation still not under control, rates are expected to be cut in a slow manner."
Interest Rates
Correct
Tariffs are expected to increase the prices of cars, including those manufactured in the US, due to the impact on imported auto parts.
"President Trump's tariffs are expected to put upward pressure on car prices, even the ones that are made in America because of the auto parts."
Car Prices
Correct
Automakers, such as General Motors, are currently absorbing the costs of tariffs, preventing immediate price hikes for consumers. GM is projected to absorb $4-5 billion in tariffs in 2025.
"However, the reason why we're not seeing a spike in car prices like at this very moment is because automakers are eating the cost of tariffs for now and they're not passing on the rising costs to consumers. So, take a look at this. General Motors absorbed $1.1 billion of tariffs in the second quarter. So, they're saying that tariffs are going to cost them $4 to5 billion this year in 2025."
Car Prices
Correct
Automakers are likely to eventually pass on the increased costs from tariffs to consumers, despite current efforts to absorb them, as they will eventually 'cave in' to avoid losing market share.
"But realistically speaking, how long will GM and shareholders hold out before passing on rising costs to consumers? So the reason why they don't want to pass on the cost of tariffs to consumers immediately is because if they do, then their prices are going to go up and that people are going to buy cars at their competitors and steal their market share. So right now it's like a game of chicken. But sooner or later, the automakers are going to cave in."
Car Prices
Correct