Vehicle Prices Set to Soar by 2026

Motorists across the globe are bracing for a significant surge in vehicle prices by next year. A mix of rising import tariffs, stricter tax policies, and escalating production costs are driving car prices upward—affecting both developed and developing markets.

In the United States, a fresh wave of 25% import tariffs is expected to take effect by April 2025, targeting all passenger vehicles and components. The impact will be widespread, inflating new car prices by an estimated $5,000 to $12,000 per vehicle.

 Even domestic models will not be spared, as manufacturers heavily rely on imported parts. Automakers like Tesla, Ford, and General Motors are already signaling that price adjustments are inevitable to offset these new tariffs.

Luxury automakers will be among the hardest hit. Brands such as Ferrari, Rolls-Royce, Jaguar Land Rover, and Aston Martin are preparing for price hikes of over 10%. 

Weakening foreign currencies, global logistics issues, and decreased demand for premium electric vehicles have compounded the pressure. Analysts say the era of relatively accessible luxury motoring is fading quickly.

Meanwhile, in Kenya, car buyers are facing an even more dramatic shift. Starting July 1, 2025, the Kenya Revenue Authority (KRA) will introduce a revised vehicle tax system based on Current Retail Selling Price (CRSP). 

The new framework raises import duty from 25% to 35%, and excise duty from 25% to 35%, while VAT remains at 16%. With the inclusion of the Railway Development Levy and Import Declaration Fees, total costs are expected to soar—potentially doubling final vehicle prices.

The result is a steep price increase even for everyday vehicles. Budget models such as the Toyota Probox and Nissan Note are projected to jump significantly in cost. 

Premium models will be hit even harder. For instance, the tax on a Porsche 911 Turbo S could rise from KSh 4.7 million to over KSh 13.3 million. Similarly, a BMW M5 Competition might attract a total tax of KSh 7.7 million, up from KSh 4.9 million.

In India, automakers including Hyundai, Maruti Suzuki, Kia, and Tata have announced a 2–4% price increase across their model range starting January 2025. These hikes are tied to rising input costs, higher logistics expenses, and currency fluctuations.

Globally, consumers are advised to make vehicle purchases sooner rather than later. The window to lock in current prices is closing fast. Whether you're in Nairobi, New York, or New Delhi, one thing is clear—owning a vehicle will become significantly more expensive by 2025. 

Buyers are urged to prepare early, compare options, and take advantage of any pre-hike dealership offers before the new tax regimes and tariffs kick in.