Will policy rollbacks make cars cheaper? U.S. Transportation secretary talks car prices at Detroit Auto Show
Members of the Trump administration visited the Motor City over the weekend, touting their push for lower car prices.
U.S. Secretary of Transportation Sean Duffy, who stopped at the Detroit Auto Show, claimed that efforts by the administration to reverse the Biden-era electric vehicle policies will make cars more affordable again, including rolling back fuel efficiency standards.
"What this team has done, at the president's direction, gives more tools to automakers to produce more lower-cost vehicles, by the way, with better technology," Duffy said.
Economic experts explain what has led to the affordability problem.
"There's no question that some of the standards that have been put in place, not just during the Biden era, but for decades before, including the previous Trump administration, those have driven up prices, but in many cases, they're doing exactly what the public wants," said Paul Eisenstein, editor of Headlight.news.
"We wanted SUVs, and then we wanted bigger SUVs. We want pickup trucks and bigger, more powerful pickup trucks. So, the carmakers responded. The price of vehicles have gone up in part because of fuel efficient standards, but that's only a small part of it. It's gone up because cars are much more luxurious than they used to be. They're bigger, they're heavier, and there's other inflation," said Erik Gordon, clinical professor at the University of Michigan's Ross School of Business.
Experts weigh in on whether relaxed fuel-efficient standards will lower the price of vehicles.
"That will let car makers make cars that maybe are not cheaper than they are today, but at least they won't be getting more expensive to comply with higher fuel efficiency standards," Gordon said.
Sources say the average price of a brand-new vehicle is more than $50,000, a record high.
"Not only have prices gone up to record levels, but so has what the average person pays in a monthly note. The average American spending more than $800 a month once they sign on a dotted line," Eisenstein said.
Automotive industry experts say tariffs are a factor, but not the only one.
"Model makers are the ones who must pay the bill, and thus they're passing an increasing share of what they're spending on tariffs on to American consumers. If the Trump administration wanted to have a short-term impact, they would take away all the tariffs that are adding hundreds and even thousands of dollars to the cost of the new vehicle you're buying right now," Eisenstein said.
"It's not just the Biden administration, it's not just tariffs, it's not just the UAW getting higher wages. It's not just higher input costs from raw materials. It's everything added up," Gordon said.
What will make cars more affordable again? Gordon said, "I think the real key to cheaper cars is to have, well, cars that are cheaper, cars that are smaller, cars that are less expensive to build, cars that have less fancy stuff."