The automotive industry is under pressure amid the broader tariff-fueled market sell-off. Edison Yu, Deutsche Bank US autos analyst, joins Market Domination to chat with Epistrophy Capital Research's chief market strategist and host of "The Drill Down Podcast" Cory Johnson to discuss how tariffs will affect used car prices.
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What does this mean for the used car market? Number one, uh, but number two, is there a bifurcation in the used car market where the vehicles that are facing higher tariffs and higher increases in the, um, uh, the new cars will pass over to the used cars. Will my used Porsche, uh, garner a much higher price than a used Porsche, than a used Ford or something?
Yes. So, prices are going up. Uh, we've done a tremendous amount of math around some scenarios. I mean, you're probably looking at anywhere from, you know, 5% to even 15%. Now, will the consumer absorb all that hit? Probably not, right? As an OEM, you're probably going to absorb some of it. Dealers have pretty good, decent margins. They may take some of the hit. So what is the net impact, the net margin, uh, net price increase? It's, it's a bit tricky to say, but, but I think you're looking at something at least at least 5%. And so if new car prices go up,
domestic vehicles
Yes.
But I'm saying is a used, is a used German car, purely German car, or whatever, that is going to face the highest tariffs, are those used vehicles going to also increase at a double digit rate?
Yes.
Yeah, yeah. I think, I mean, if you look at historically, right, you know, new, new car prices go up, um, I think it would drag up, and especially in this case, used car prices. I don't know if it will happen all, you know, in sequential order, right? Because you're going to see a big surge in demand right for the next month or so. And you've seen Ford, GM, Stellantis, some of these auto makers come out with some discounts. So, it, I don't know if your Porsche is going to go up immediately that much, but I think over time it will absolutely appreciate.