Is this a good time to buy a car? Here’s the fall outlook with tariffs here, EV tax credits gone

There’s a tipping point when it comes to a devastating repair estimate on your 12-year-old car.

Pay out several thousand to keep that faithful friend running — or bite the bullet and buy a new one?

That question is particularly fraught now with high interest rates, tariffs and vanishing rebates. We can’t decide for you, but we can provide expert advice on the head-spinning twists of the auto market.

Tariff trauma?

The Trump administration’s tariffs on steel and aluminum imports, and autos manufactured outside the United States, have been in play for weeks.

So far, “the big surprise is that things are as normal as they are,” Consumer Guide Automotive publisher Tom Appel quipped.

“For now, manufacturers have primarily absorbed the costs of tariffs, however, they will not be able to sustain that for much longer,” Chicago Auto Trade Association President Jennifer Morand said.

“I do think eventually, it will be on the dealers, the actual franchises, and eventually will trickle down to the consumer if this continues,” she added.

Appel noted that in 2026, foreign companies including Audi and Subaru plan “pretty significant” price increases, which they attribute to tariffs.

Likewise, GM “won’t be able to hold the line on prices” on products such as Chevrolet’s Trax and Trailblazer and Buick’s Envista and Encore GX. All are made in South Korea, said Appel, a Palatine resident.

“Manufacturers will have to respond eventually to the increased tariff pressure and even though domestic makers have largely been shielded from a lot of these costs … they’re still paying higher costs for imported aluminum. Everyone’s going to be raising prices somewhat.

“So, this is a good time to buy a car. Unfortunately, it’s not a good time to buy an electric car,” Appel said.

EV rebate nixed

Passage of the One Big Beautiful Bill Act ended years of $7,500 EV federal tax credits on Oct. 1.

Dealers saw “a huge uptick in EV sales last month because everyone was rushing to buy,” Morand said, adding U.S. purchases in the third quarter should near 410,000 units.

“Now I think, we’re going to see the market cool off for the time being.”

But the pullback of government support won’t derail EVs, analysts predicted at the CATA-sponsored Chicago Drives Electric event Thursday.

“Electric is here to stay,” CDK Global’s David Thomas said, citing owner loyalty as one reason.

Research by CDK, an auto software supplier, shows 82% of EV owners plan to buy another, he explained.

Meanwhile, the state of Illinois will offer EV rebates of $4,000 for low-income residents and $2,000 for others. Applications open on Oct. 28. For information, visit epa.illinois.gov/topics/ceja/electric-vehicle-rebates.

Also, Ford and General Motors announced last week they intend to extend the $7,500 incentives on leased EVs, Morand said.

And, ComEd is continuing a rebate program giving homeowners up to $3,750 on the cost of Level 2 fast charging equipment and installation. To learn more, visit Comed.com/EVCharging.

Interest rates

Summer sales “weren’t poor but they weren’t great,” said Greg Webb, a partner at Packey Webb Ford in Downers Grove.

“Interest rates are still a huge factor. Although there’s a lot of interest incentives out there, I don’t know that it’s moved the needle as much as some of manufacturers hoped it would.”

After the era of 0% interest for 60 months, “when prime is as high as it is, and you hear someone’s going to give you 4.9% I don’t think that necessarily excites anyone,” Webb said.

Nor did the Federal Reserve’s recent quarter-point interest rate cut, he noted.

More rate cuts are expected in 2025 that could stimulate buyers but bottom line, “nobody knows what’s going to happen,” Webb said.

He does anticipate, “there’s some pent-up demand again. I think 2026 is going to be a good year.”

Got a car-buying story to share? Drop an email to mpyke@dailyherald.com.