US Auto Sales May Drop by 25,000 Annually Due to Restrictions on Chinese Vehicles, According to Reuters

By David Shepardson

WASHINGTON – The Commerce Department announced on Friday that U.S. auto sales could potentially decline by as many as 25,841 vehicles annually, with an accompanying rise in prices, if new regulations are implemented that would prohibit Chinese vehicles equipped with internet connectivity and certain Chinese software and hardware.

According to the department, U.S. automakers and those selling in the U.S. market may become less competitive globally due to comparatively higher vehicle prices. The department estimates that the rule could lead to an annual reduction of between 1,680 and 25,841 vehicles sold.

In an effort to mitigate national security risks that could be utilized by China, the department also predicted that the proposed regulations might prevent $1.5 billion to $2.3 billion worth of vehicle components from Chinese or Russian companies from being used in vehicles sold in the U.S.

The department previously indicated that the proposed regulations would effectively serve as a ban on Chinese vehicles, given that all such vehicles would utilize internet-connected software and hardware. However, it has offered a pathway for companies to apply for exemptions.

The proposal states that software prohibitions could start with the 2027 model year, while hardware restrictions may begin in 2030 or January 2029. A public comment period of 30 days will be available before the rules are finalized.

According to the Commerce Department, the main advantage of these regulations would be a decrease in the likelihood of serious security threats arising from data breaches and remote control of connected vehicles.

This week, the department specified that General Motors and Ford Motor Company would need to halt the import of vehicles from China under the new rules.

General Motors markets the Buick Envision, and Ford offers the Lincoln Nautilus, both of which are manufactured in China for the U.S. market. In the first half of 2024, GM sold approximately 22,000 Envisions, while Ford sold around 17,500 Nautilus vehicles in the U.S.