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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."