Auto dealers can help customers cope with tariff-phobia.
That’s particularly the case for dealers selling imported vehicles, which are subject to hefty tariffs. Those would exacerbate the ongoing affordability issue of rising car prices, says Kevin Roberts, director-economics and marketing intelligence for CarGurus, a car-selling website.
“I’m of the mindset that purchasing a vehicle in general is buying a luxury item,” Roberts tells WardsAuto. “Affordability was already an issue before the tariffs.
Average new-car transaction prices rose to $48,699 in April, a 2.5% increase from March, according to Cox Automotive’s Kelley Blue Book.
“When average prices are up to almost $50,000, that’s getting high,” Roberts says.
Like the previous parts shortages that hurt vehicle production levels and the COVID pandemic that disrupted auto sales, dealers have no control over tariffs.
But dealers can help consumers understand what is happening, how it affects them and what they can do about it, Roberts says.
“Dealers can be proactive,” he says. “They can be open and transparent in explaining which cars are affected by tariffs, and which aren’t.” (Roughly 50% of vehicles sold in America are built in the U.S.)
Dealership salespeople can also tell consumers about different trim levels, while focusing more on customer needs rather than wants, Roberts says.
Since the announcement of auto tariffs – or threat thereof – the automotive market has seen swift and substantial shifts, reshaping the automotive landscape almost overnight.
CarGurus’ latest automotive intelligence report says the tariff announcements triggered a dramatic buying frenzy.
Early April new-vehicle sales surged nearly 50% year-over-year as buyers scrambled to beat anticipated price hikes.
The wave also rippled into the used market, with sales jumping 24% year-over-year.
Many of those buyers were somewhat in the car market already, at a point of considering a vehicle purchase. The typical purchase process can take anywhere from weeks to months.
But the tariff talk represented a novel call to action.
“It crystallized it,” Roberts says. “People on the fence got off it and headed to the dealership. They got the message. Things have calmed down, but there has been a change in buying habits.
Sky-high tariffs, which have been put on hold a couple of times, are poised to significantly reshape pricing, potentially adding about $2,500 to the average new-vehicle price, according to CarGurus.
Did the recent buying frenzy pull ahead future demand? So far there there’s little indication of that.
“Sales aren’t trending down at this point,” says Roberts, who, during an interview, seems to take a negative view of such levies on imported vehicles.
Asked if he opposes them, he responds, “Most macro economists are for free trade.”
Erin Keating, executive analyst at Cox Automotive, says, “Ever since President Trump announced auto tariffs days ago, the cost of new cars has been steadily climbing.”
Roberts says that despite tariff-induced volatility, both new and used markets are demonstrating “remarkable resilience.”
Says Cox Automotive Chief Economist Jonathan Smoke: “Dealers have a frontline view of the U.S. auto market, which appears to be at an inflection point.”
He adds that the recent sales pace has been positive, lifting current market sentiment higher for franchised dealers. But expects 2025 to be a “rollercoaster” for this industry.
The current political climate and the impact and uncertainty of auto tariffs played heavily in Cox’s latest dealer sentiment report. No surprise there.
Among franchised dealers’ concerns: the political climate, tariffs, the economy and interest rates. Dealers say those factors are holding back business, according to Cox.
But uncertainty hits the hardest.
Cox cites a Chevrolet dealer who says: “The market has been very unstable with the current political whiplash going on. Tariffs today. No tariffs tomorrow. No, wait. Tariffs are back on.”
A Toyota dealer says, “Things are going to be challenging in the second half of the year.”
