Dealers should prepare for a shortage of affordable vehicles and manage inventory carefully as the impact of tariffs begins to hit new-car supply, David Greene, principal, industry and marketplace analytics at Cars.com, tells WardsAuto.
Two learnings emerge from the Cars Commerce Q1 2025 Auto Market Review:
“The most affordable vehicles come from our neighbors to the north and the south, and those are going to be under the most (price) pressure,” Greene says.
The availability of affordable new cars is a “big concern” for consumers, Greene says, yet Cars Commerce finds that only 23 vehicle models are priced under $30,000, and all but three are imported, primarily from Mexico.
The Trump Admin. has imposed 25% tariffs on vehicle imports, including those from Mexico and Canada. The report analyzes the country of final assembly for vehicles of different price ranges.
It finds that vehicles “assembled in U.S. factories carry a higher average price than imports from other major manufacturing regions.”
For example, in the first week of April, the average price of a new car whose country of final assembly was Mexico was $12,580 less expensive than an American-made car. A car from Canada was $7,119 cheaper.
Furthermore, sub-$30,000 vehicles account for only 14% of inventory, “well below the 38% share seen in 2019-21,” the report says.
Of those, 89% were produced outside of the U.S., making them especially vulnerable to tariff-driven cost increases and potential production cutbacks.
If a dealer sells a brand offering one of the sub-$30,000 cars, Greene says, “I should be concerned about being able to get those.”
Where Was That Car Made?
At dealerships, Cars Commerce finds that dealers and consumers often do not know where a vehicle’s country of final assembly is, and thus whether it is subject to a tariff, Greene says.
“Everybody needs to understand that the badge on the hood of a car doesn’t have a very strong correlation with where that vehicle is built,” he says.
Cars Commerce has been surveying dealers and consumers shopping for a vehicle daily since mid-February, Greene says, and “there is a definite mismatch in dealers’ understanding of where they think a car is built versus where it is actually built.”
That is true even of the vehicles on their lots, he says. Domestic brands are sometimes not finally assembled in the U.S., Greene says.
Knowing that and being able to tell prospective buyers about it “will assist a lot with those tariff-related discussions,” Greene says.
Keep an Eye on Days Live
Dealers should also pay close attention to the inventory they carry, as Cars Commerce finds that new cars are spending 20% longer on dealership lots before being sold compared to a year ago.
The “days live” averaged 78 days in the first quarter of 2025, in line with pre-pandemic levels from the same time in 2019.
This looks normal, Greene says, but “when market conditions are changing, I would recommend dealers manage their inventory a lot more tightly.”
He suggests dealers avoid taking risks on vehicles they are not sure they can sell.
“We all know 30 days is the magic number,” Greene says. “After that (a vehicle) gets stale and starts to cost money.” Then, dealers should start discounting, he says.
