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After President Trump announced those 25% tariffs on cars not made in the US, we are seeing a move to the downside in these stocks here. Meantime, Morgan Stanley upgrading Carvana to overweight from equal weight, citing the stock's recent pullback as an opportunity for investors. That follows City's upgrade earlier this year to buy/high risk, raising its price target to 277 from 195 on Carvana, citing strong retail unit sales growth. You can see here, Carvana stock down over 2%, CarGurus down 6%. I think we're also getting a move to the downside off the back of this JP Morgan downgrade of this entire sector here this morning. What's really interesting about the used car space when it comes to tariffs is that you still see price hikes coming into the used car sector, and we see this come up time and time again in the CPI inflation data here because, yes, the car makers who are obviously importing cars from the likes of Mexico have to take on the impact of those tariffs, and then they likely push that cost onto the consumer, raising that price. But then, the car industry is one where you typically see a little bit of price gouging, to put it bluntly here. You do see used car prices going up in tandem because they can because if you need a car, you're going to buy one, and the question is whether or not consumers are going to be able to withstand that inflationary pressure.

Yeah, some context on this from JD Power, they actually, in their forecast for this year, they note that the average used vehicle price is trending towards $28,552. That's down, get this, just $22 from the same time last year. Now, this actually, they say, reflects this combination that they're seeing. Reduced supply of recent model year used vehicles due to lower new vehicle production here of during the pandemic, most notably, and then additionally combined with fewer lease maturities plus discipline from the manufacturers out there that have yet another concern on the tariff front to be really kind of running the calculus around here. But the discipline for manufacturers they state to moderate the discounts available on new vehicles. So that's where the used vehicle market is certainly being impacted here. Also being influenced by things such as emerging tariff-related price concerns, they had noted in their report just this week. The effect not yet material, won't be until April, or early April, and then ultimately into the parts in early May. But the effect not yet material, any increase in new vehicle prices, they note, will inevitably lead to higher used vehicle prices.

Right, right, exactly. This is exactly what the JP Morgan analyst has saying. Used car pricing will react instantaneously to these tariffs, meaning that we will see a price increase likely instantaneously, the moment these tariffs are applied, saying new car prices could rise 9 to 12% on the back of these tariffs. So pretty significant price increase for consumers.