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Race to get finished vehicles through US ports before

April 3

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Toyota ( TM ) says does not plan to raise US prices yet

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Hundai and Ford have far higher stocks

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Automakers in talks with dealers on spreading costs

By Nick Carey and Nora Eckert

LONDON/DETROIT, April 2 (Reuters) - Automakers with

plenty of cars on dealer lots have a time advantage as they hone

their strategies for passing on President Donald Trump's 25%

tariffs, while Toyota's ( TM ) lean inventories could force it

to hike customer prices sooner.

Trump imposed 25% duties on imports of foreign cars last

week, which analysts say could add thousands of dollars to car

prices, sending buyers scurrying into dealerships to try to beat

the inflation.

As of March 17, Toyota ( TM ) had 32.7 days supply of vehicles,

according to automotive services provider Cox Automotive, well

below the industry average of 89 days, and just 20.9 days supply

of its popular RAV4 SUV.

Toyota ( TM ) said it does not plan to raise U.S. prices for now

and Cox executive analyst Erin Keating said Toyota ( TM ) has told her

it can boost production at its Kentucky plant.

"But they'll still be vulnerable because of the sheer math,"

she said.

Pre-tariff cars have become a hot commodity.

In North Haven, Connecticut, Bob Thomas Ford in suburban

Hamden has a billboard proclaiming: "100 pre-tariff Fords

available!"

Ford had 103.4 days of supply as of mid-March,

according to Cox, while Hyundai had 107.4 days.

The race is on to get finished vehicles through U.S. ports

before the duties take effect late on April 3, qualifying them

as pre-tariff models and delaying price spikes in an uncertain

economy.

A source at a major European carmaker, for instance, said it

shipped as many high-end models as possible across the Atlantic

ahead of tariffs.

The Trump administration's 25% tariffs on some auto parts -

engines, transmissions, powertrain parts and electrical

components - will have a slower effect, with some analysts

estimating parts imported after midnight on April 3 will end up

in finished vehicles starting mid-April.

Price hikes should follow soon after.

Auto analyst Mel Yu said imported auto parts account for

between 40% to 80% of U.S.-made cars and 20% to 40% of the

retail price.

"No matter where they are made, car prices will go up," he

said. "The impact of the parts tariffs will be pretty quick."

Yu has been consulting for a number of automakers in ongoing

talks with U.S. dealership groups on spreading out tariff costs,

which should add between 8% and 16% to the retail price a car.

Those talks should see dealers take a lower upfront profit

on sales. In return, automakers will lower the sales targets at

which dealers make lucrative bonuses, while also cutting

interest rates and extending financing terms, translating into

an increase in monthly payments for consumers of 5% to 7%, Yu

said.

"Almost 97% of U.S. retail customers take either financing

or a lease," he said. "So it's all about the monthly payment."

But consumers will face a bigger hit with higher car

insurance premiums as higher part cost make repairs expensive.

Cox's Keating said higher monthly payments and premium hikes

will force more U.S. consumers into the used car market, pushing

up prices.

"GONNA HURT"

In the near term, automakers and dealers with plenty of

pre-tariff cars have some breathing room.

Jim Seavitt, owner of Village Ford in Dearborn, Michigan,

has 90 days of vehicle supply now to buffer the impact.

Ford imports fewer finished vehicles from Mexico and Canada

than its Detroit rivals General Motors ( GM ) and Stellantis ( STLA )

, so higher auto parts prices are Seavitt's main

concern.

"We're gonna be okay short term," he said. "If this goes on

longer, it's gonna hurt dealers."

Most automakers refuse to comment on price increases, with

the exception of luxury producers like Bentley or Ferrari that

will pass on the extra costs.

Mercedes-Benz is building up U.S. inventory levels

to get ahead of tariffs, executives told analysts on a call on

Monday, according to notes by analysts.

Asked about pricing, executives said no carmaker operates in

a silo, implying it would observe how competitors responded to

tariffs, a Bernstein Research note said.

In a March report, economist Arthur Laffer wrote that

manufacturers with low inventories "would need to raise prices

almost immediately to maintain profitability".

"There would be a delayed but inevitable impact for others,

as manufacturers with larger inventories could temporarily delay

price increases," he added.

Toyota's ( TM ) lean inventories make the question of price hikes

more urgent.

The company has struggled to increase production of its

popular hybrids and Koji Endo, head of equities research at SBI

Securities said the automaker "may start moving to raising

prices little by little from around the beginning of May".

"They have very low inventory... not even enough for one

month, so everything will sell out soon," Endo said.

Seiji Sugiura, an analyst at Tokai Tokyo Intelligence

Laboratory, said the weak yen could allow Toyota ( TM ) to delay price

increases and take market share from U.S. rivals GM, Ford and

Stellantis ( STLA ).

"However, we don't know how the Trump administration would

interpret this," Sugiura said.

Beyond Toyota ( TM ), individual models pose headaches for U.S. and

foreign automakers alike.

Cox's Keating said the company sees five models - the Honda

CR-V, Chevy Trax, Subaru Forester, Chevy Equinox and Honda HR-V

- as most impacted by tariffs, with an average of 51 days

supply.

But a pre-tariff rush could see those models sell far

quicker.

"If it's a fast-selling car that now becomes in demand even

more and it sells faster, then very soon that day supply gets

adjusted downward," she said.