General Motors (GM) reported in second-quarter results on Tuesday that tariffs cost the company $1.1 billion. Despite that hit, the carmaker insists it will not pass the cost to consumers by raising prices on cars, which should be welcome news if you're in the market for a new car.
"When you look at the first quarter, pricing was up; second quarter, pricing was essentially flat. But we've banked some of those gains, and that's part of our 30% offset that we've talked about," CFO Paul Jacobson said on CNBC's Squawk Box.
"So we don't expect any specific price increases related to tariffs, but certainly pricing and stability is important for us as we continue to manage our inventories with discipline and really drive the business for cash flows."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
President Donald Trump instituted a 25% tariff on all imported cars and auto parts, with some particularities including that vehicles assembled in the U.S. are eligible for partial tariff rebates. The tariff went into effect in late spring.
While GM, which includes Chevrolet, Buick, GMC and Cadillac, has manufacturing sites in the U.S., the company also has other global operations. GM seems to be taking efforts to mitigate long-term impacts of tariffs: The company announced a $4 billion investment in U.S. manufacturing plants in June that will go in part towards the production of the gas-powered Chevrolet Blazer and Equinox, which are currently produced in Mexico, CNBC reported.
Looking ahead, GM plans to invest between $10 billion and $12 billion annually through 2027, with a focus on boosting U.S. production in key states: Orion Assembly in Michigan, Fairfax Assembly in Kansas and Spring Hill Assembly in Tennessee. This initiative is part of a larger strategy to improve operational efficiency and strengthen its manufacturing presence in the U.S.
On Squawk Box this week, CFO Jacobson reiterated that consistent pricing is a key component of GM's strategy. So, whether you're in the market for a new car or if you already own a GM car, the company aims to keep cars' values and prices predictable.
"While we've seen a lot of heavy incentives from our competitors over the last few years, we've maintained a lot of pricing consistency," he said. "And we think that's important for our customers to make sure that they can count on us, but also to make sure that we're watching and monitoring residual values, because our customers do hold on to these vehicles and want to make sure that they maintain their value."
Overall, car prices have not gone up yet since tariffs were introduced, but discounts have started to become less generous, according to Kiplinger Letter managing editor Jim Patterson. He expects sticker prices will eventually rise by 4%-8%.
Another concern for car shoppers is that cheaper models — those in the $30,000 range — could become more scarce since they are often imported and have lower margins, Patterson reported. The battery-powered Chevrolet Equinox, which is in that price range, was the third best-selling electric vehicle in the U.S. year-to-date, GM reported in its earnings.
Keep in mind, there's been a rush on EVs since the "big, beautiful" bill put an expiration date on EV tax credits. You can now only get a credit before September 30 of this year. Basically, whether you're in the market for an electric, hybrid or gas-powered car, you may want to think about shopping sooner rather than later as these credits go away and tariffs come into play.
Related Content
-
Think Twice Before Getting a Credit Card Cash AdvanceA credit card cash advance can be a quick solution when you need emergency help with money. But you'll pay for the convenience with high interest and fees.
-
What is AI Worth to the Economy?The Letter Spending on AI is already boosting GDP, but will the massive outlays being poured into the technology deliver faster economic growth in the long run?
-
Think Twice Before Getting a Credit Card Cash Advance
A credit card cash advance can be a quick solution when you need emergency help with money. But you'll pay for the convenience with high interest and fees.
-
5 Home Run Hotel Packages Every Baseball Fan Will LoveFrom Fenway to Yankee Stadium, these bundled hotel-and-baseball deals combine savings, perks and unforgettable fan experiences.
-
9 Warren Buffett Quotes for Investors to Live ByWarren Buffett transformed Berkshire Hathaway from a struggling textile firm to a sprawling conglomerate and investment vehicle. Here's how he did it.
-
My First $1 Million: Retired Marketing Consultant, 74, Southern New HampshireEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Amtrak Debuts High Speed Trains as Train Travel Enters a New Golden AgeAmtrak's new high-speed trains come with upgraded amenities, expanded schedules and more as rail travel demand surges.
-
I'm a Financial Adviser: Three Things You Will Wish You Did Before the Fed Cuts Interest RatesWith potential interest rate cuts on the horizon, you might want to lock in today's higher yields and consider adjusting your asset allocation.
-
Simple Ways to Save on Back-to-School Shopping This YearSet a budget and stick to it, scour the house for what you already have, decorate backpacks and lunch boxes with your kids and consider buying some items during holiday sales.
-
Stocks End Strong Month on a Down Note: Stock Market TodayThere was likely a bit of profit-taking ahead of a historically weak September.
