HONOLULU (KHON2) — Thinking about buying a new car? You might want to shift into gear fast. Auto experts say a big price hike could be coming following a 25% tariff on vehicles.
The Hawaii Automobile Dealers Association said it was a slow first quarter with new car sales down 1.3% versus last year.
But the end of the first quarter and the start of the second came at a time when more people started buying cars due to tariffs going into place.
“There was a surge in demand in just the last two weeks of March,” explained Mostafa Saad, President and CEO at Autozilla. “People coming in looking for cars, there was a lot of worry about tariffs going into effect on April 2.”
Next week, car parts are expected to be hit with a 25% tariff as well.
“Tariffs are expected to impact all of the parts of the vehicle, so if we have a higher-priced vehicle, we might see the overall price of a vehicle going up $8,000 to $10,000,” said HADA Executive Director Melissa Pavlicek.
She said the National Association predicts non-luxury vehicles could jump up $2,000 to $8,000.
“The promotions every brand has out there are really good and there is good inventory still available,” explained BMW Honolulu General Manager Tim Palms. “It’s going quick, there are a lot of people shopping for cars, so I don’t know what’s going to happen down the road, but I know cars aren’t going to get cheaper.”
He said all vehicles on the lot and in the showroom are currently tariff-free.
“For BMW, cars built in April and May are price protected and there will be no increase in price,” he added. He said they will find out soon what will happen with cars made after May. “BMW has been clear they do not want massive increases in price.”
And it doesn’t matter if you buy a domestic brand or imported car, because it’s unknown where all the parts for the car are going to come from. But even imported cars have manufacturers in the U.S. BMW said its SUVs are made in South Carolina.
“Regardless of where the car was built, everything here right now is all priced as it was yesterday,” Palms said. “If you’re considering something, don’t wait too long, especially if there is one you see and like, go for it.”
Once new inventory goes, experts said people will eye used cars.
“The prices are going to go up mostly because of the uncertainty,” explained Rima Braden, owner of Autosource Hawaii. “The manufacturers can’t really plan the future, so some shut down imports entirely, some have just slowed production, so when they do that, the dealers will hold inventory longer, ask higher prices, so they can mitigate future.”
And the forecast depends heavily on tariffs.
“If tariffs are a higher rate or higher than proposed, we could see auto sales down 10% or more, which would impact jobs at new dealers and consumers,” Pavlicek added.
Dealers believe they’ll have a better understanding of what to expect by the second quarter.
For now, they said there are good deals on leasing.
At Autosource, people looking to lease a car can do so every six months and return a car. “People like flexibility and we haven’t seen a change in carousel because the are confident they can return the car at any time,” Braden said.
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“With high interest rates, a manufacturer will look towards leasing, and so on this BMW i4, it has a $399 lease ad, it’s a $60,000 car and we have two left, these are moving well,” Palms said.