00:00 Speaker A

New tariffs are the latest speed bump for automakers, and it may be causing the consumer to switch gears when it comes to luxury brands. Joining us now is Yahoo Finance senior auto reporter Pras Subramanian. Pras,

00:14 Pras Subramanian

Yes, sir. Reporting from your former backyard, California, right, Josh? Uh, you know, tariffs and luxury. Uncertainty is sort of the name of the game that we’re hearing at Monterey this past week. Uh, let’s start with tariffs. You know, Bentley told me that they had to, you know, they had to pause cars earlier, but now they’re importing UK with the 10% deal that’s signed. So that’s helping them there, bringing those deliveries back. But for others, like the EU and Japan, they’re still at 15%. Those deals aren’t officially yet, right? Uh, so they’re having some issues with Infinity at the premium end. It’s a bit different story and Lamborghini at the upper high end, a different story, too. Uh, let’s hear from these top executives about what they had to say about the tariff situation.

01:06 Speaker B

So, for example, QX50, we had to pause the production into the US. Uh, and, but in Canada, there’s a lot of opportunities. So we ship more vehicles there. We also increase the production of QX60 that is built here in the US.

01:31 Speaker C

The worst thing is uncertainty. We are for free trade. Uh, today, we have still the 27.5% of tariffs, which is not good for the business in general. And so we we have a share between the customers and us. We take the bigger part, and we hope that soon we will come at least through the 15%.

02:25 Pras Subramanian

Yes, so Lambo hopeful there about that 15% tariff rate. And they said that it was unfair that they, they didn’t want their customers to pay the full amount. So they absorbed most of it and passed on a little bit in the form of, you know, smaller price cycles, right? So, uh, all in turn out to the luxury consumer again, a mixed bag here. So, and the Jaguar’s MD, their top executive told me his name is Rawdon Glover. He told me that, quote, luxury is not impervious to all these macroeconomic things that are going on, like geopolitics, but it’s pretty robust, right? Uh, and then Bentley CEO, which you would think that the higher end things would be better, not exactly true. Mike Rocco, the US CEO said, there’s hesitancy in luxury automotive, but you’re also seeing that translate to real estate and other luxury goods saying, meaning that, you know, you go to, you go try to get, may want to get a watch and get any deal you want right now with the Swiss watches, right? Even though their CEO, the tariffs are kind of getting higher there. So, again, different cases here. Infinity, again, that premium, not super high-end luxury, different story. Lamborghini, of course, at the ultra-luxury high end. Here are those two execs again talking about the luxury consumer.

04:12 Speaker D

As far as the consumers are concerned, we see the market still moving in the right direction. Leading indicators, everything from website traffic to visits to dealers are increasing, so positive the year ahead of us.

04:43 Speaker E

The first half of the year was almost in line with the first half of 2024. And the next six months is difficult to make a forecast because there’s a lot going on in terms of geopolitical changes.

05:29 Pras Subramanian

Yeah, so you know, thinking with Italy and a company that sort of operates on both of those ends, a little premium and ultra luxury, Maserati. Uh, their new CEO told me that, you know, from the premium luxury buyer, think crossover SUVs, uh, they’re still going to make that purchase. They’re going to still release that car because it’s not going to be that much of a difference from price. But for like a $300,000 sports car, add 30,000, 40,000 in tariffs, some of that buyer might say, I don’t want to pay that. At least not right now.

06:18 Speaker A

I am surprised that if I’m some, you know, I’m this I’m a hot shot in Miami. I’m on the hunt for a new lime green Lambo. I am surprised that rates or geopolitics would be on my radar at all, Pras, to be honest.

06:50 Pras Subramanian

Yeah, I think it’s, that’s sort of the conventional wisdom, right? It’s like, hey, they have money to burn. What’s the big deal? Why would they hesitate? And it seems like there’s something in the car world where there’s the, the sort of, I’ll, we’ll do it next week, you know? So you have a big purchase on tap and you think to yourself, you know, we’re seeing stuff happening in Russia and in Ukraine and even in the Middle East. And you’re seeing this, there’s still the high tariffs, you still have uncertainty. AI balloon potentially popping. And they think, you know what? Give it to me till next week. It’s kind of like the Maserati CEO said, you might want a Maserati, but you don’t need one. And if you don’t need one, you might push that back. And this is the CEO saying that. So I think you’re right. I think there’s certain people, buyers that are like, you know what? I’m buying that Rolls-Royce. Like, I want it. I deserve it. I’m going to get it.

08:17 Speaker A

What does need have to do with it? I mean, it’s just pure want. Come on, Pras. Thank you.

08:33 Pras Subramanian

If you want it, if you want it bad enough, you’re going to get it, right?

08:39 Speaker A

It’s good.