CARMEL, Calif. — Though the biggest luxury names in the auto industry at Monterey Auto Week spent their days celebrating world premieres and their nights entertaining clients at fancy parties, there was an undercurrent of concern.
In conversations with execs from European and other global automakers, two issues stood out the most: the impact of ever-changing tariffs on their businesses and the economic uncertainty that’s weighing on the luxury consumer.
A ‘deal’ doesn’t necessarily mean certainty
On Thursday, US and EU negotiators established a written framework for a trade deal, including a 15% US tariff on most EU imports such as pharmaceutical goods, semiconductors, lumber, and autos.
But tariffs on EU auto imports will stay in place, currently set to 27.5%, until the EU takes further steps to follow through on its commitments to lower tariffs on some imported American goods.
Translation: The trade deal isn’t a deal for this industry, at least not yet.
Read more: What Trump’s tariffs mean for the economy and your wallet
Italian luxury automaker Lamborghini (VWAGY), which showed off a million–dollar–plus limited edition sports car dubbed the Fenomeno, isn’t counting on those duties to subside soon.
“For sure, the worst thing is uncertainty. We are for free trade, but today we have still the 27.5% tariffs, which is not good for the business in general,” CEO Stephan Winkelmann said. “We have a [cost] share between the customers and us, we take the bigger part [of the tariffs], and we hope that soon we will come to the 15%.”
Lamborghini said in the past it was “unfair” to put the full tariff burden on customers, which, at nearly 30%, would mean duties of nearly $100,000 on its cheapest vehicles.
Stellantis’ (STLA) luxury brand Maserati, also based in Italy, said it is maintaining pricing at current levels and still waiting for “clarity” from any trade deals. CEO Andrea Soriani notes that any bilateral deal with the EU is complicated not just by direct negotiations with the bloc and the US, but by bilateral agreements between EU member states as well.
And rising costs for automakers are not just coming from tariffs either.
“Don’t forget, you don’t have only tariffs. You also have inflation. You have increases in the raw material [costs],” Soriani said. “There is this tendency to connect or to link any price increase to tariffs. Let’s not forget that we are still living with inflation.”
UK luxury automaker Bentley (VWAGY) is in a slightly better position. The US-UK trade deal means British autos are tariffed at 10%, but with a cap of 100,000 auto imports.
While that’s good news, it’s still disruptive for business.
“There’s obviously been a lot of disruptions, with what’s taken place with the administration and the discussion around tariffs, and how we’ve had to kind of pause bringing cars into market,” said US CEO Mike Rocco. “We literally didn’t really bring anything in for 90 days.”
Now cars are coming in, but that doesn’t mean everything’s back to normal.
“We have more disruptions in the market, and while no price was changed, just the assumption of people was, ‘Oh, something changed,’ they hold back [on purchases due to] a lot of uncertainty in the market,” said global CEO Frank Walliser. “It’s not on the price; people don’t even look at the prices. They just do not go into a dealership.”
Bentley said revenue for the first half of the year dipped to $1.51 billion, down from $1.82 billion a year ago.
For Japanese premium brand Infiniti (NSANY), a signed 15% tariff deal with the US brings much-needed certainty. But it also means the company, and others, will look to ship production to other regions to minimize tariff exposure and localize operations.
“So, for example, QX50, we had to pause the production into the US, but in Canada, there’s a lot of opportunities, so we shipped more vehicles there. We also increased production of QX60 that is built here in the US,” said Tiago Castro, Infiniti’s top exec in the Americas.
The all-new QX65, which premiered in Monterey, will also be built in the US, which Castro said was “very important” to increase its US footprint.
The luxury consumer: Resilient or retrenching?
The health of the luxury auto buyer was yet another worry at Monterey.
The big Wall Street takes on the consumer were nearly universal: that the high-net-worth, luxury buyer is fine — in contrast to Main Street consumers who are tightening their belts. This seemed to be confirmed with inflation returning and consumer sentiment taking a big hit recently, indicating that the consumer at the lower end was facing some pressure.
But there are two luxury markets, it seems: the higher end that goes for Ferraris and the “premium segment,” more disposed to autos like the BMW 3-series and Audi entry-level cars.
“Luxury is not impervious to all of those macroeconomic things that are going on, geopolitical, but it’s pretty robust — so much more so than the volume or the premium segment,” noted Rawdon Glover, managing director at Jaguar.
While Jaguar awaits its big luxury move into the $120,000 car range, it’s still selling premium SUVs like the F-Pace, which starts at half that much.
Glover adds that for a higher-end luxury consumer to spend cash these days, they need something that’s differentiated, that “stands out from the crowd.” They want something with real craftsmanship and a level of exclusivity.
It doesn’t get much more exclusive than Lamborghini. While the luxury brand says sales are still in line with last year’s despite higher costs, Lambo’s top exec disagrees with Glover’s take, claiming the high-net-worth buyer is pressured too.
“The next six months is difficult to make a forecast because there is a lot going on in terms of geopolitical changes, but for sure we will do the best to have a very strong year this year,” Lamborghini’s Winkelmann said, signaling certainty isn’t a given.
Lamborghini’s order book was still solid with one year’s production of cars already spoken for, but the big question is whether that book will grow.
Bentley, Lamborghini’s Volkswagen stablemate, is also concerned about its high-end clientele.
“There’s certainly hesitancy in luxury automotive, but you’re also seeing that translate to real estate, high-end luxury items, watches, things [like that] — there’s more availability,” or supply of goods at luxury retailers, US head Rocco said.
Rocco’s point is that while these buyers aren’t necessarily hurting for cash, they just aren’t ready to sign on the dotted line. “People have done well through what’s happened, with buying the dip of the stock market. They’re ready … [but] the dam needs to break slightly for them to come back into market.”
Infiniti’s Castro is seeing improvement lately, though the company is still emerging from a trough in demand for its product. “But 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 [we see a] positive year ahead of us.”
Add Maserati’s Soriani to the crowd that sees bifurcation at the top end. “It’s a mixed basket. I think that some consumers are on the fence,” he said, adding that those buying at the $100K+ range might be hesitant, but those opting for a premium crossover like the Maserati Grecale may pull the trigger because lease payments, for example, may not go up so much including tariff costs.
But, as Soriani notes, buyers in the luxury market have one big “luxury,” and that’s choice.
“Let’s not forget we are in the business of want, not necessarily the business of need,” Soriani said.
Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.
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