How Tariffs Are Impacting Auto Dealerships

The Current Reality of Tariff Impact

So far, most dealerships we work with haven’t seen significant impacts directly tied to tariffs. In fact, March and April floor traffic and sales figures have been strong — better than what we saw in January and February. That suggests consumers may be moving to purchase now, worried about possible price increases down the road.

While a few manufacturers have made the decision to pull certain models from the U.S. market, broad disruptions in inventory haven’t materialized yet for most stores. Parts availability also remains relatively steady, though this is an area we’re keeping a close eye on.

Is It Just Fear?

It’s hard to say how much of the current conversation is driven by real market shifts versus fear of what could happen. Consumer sentiment can move markets even before the actual impacts are felt. And fear of rising prices could be a factor pushing shoppers into showrooms sooner rather than later.

Learning From Covid Uncertainty

In many ways, today’s environment echoes the uncertainty we all faced during the early days of COVID. Back then, fear of the unknown led to quick decisions — like taking in excess parts inventory, rushing to adjust staffing levels, or making aggressive pricing changes without clear long-term data.

Some of those moves paid off. Others created challenges later, like tying up cash flow, dealing with overstocked inventory, or scrambling to rehire talent.

The lesson? Stay measured. It’s important to be proactive, but not reactive. Right now, it’s too early to make big, sweeping changes based on tariff predictions alone. Instead:

• Monitor trends closely.

• Focus on cash flow flexibility.

• Maintain strong communication with suppliers.

• Prioritize retaining talent and customer relationships. By avoiding panic moves, dealerships can stay agile — and be ready to pivot when clearer data emerges, just as the most resilient stores did during the pandemic.

What to Watch Moving Forward

While the effects at the dealership level have been minimal so far, it’s smart to stay proactive.

Here’s what we recommend monitoring over the coming months:

• Inventory Levels: Watch manufacturer allocations closely, especially if you carry brands that source heavily from regions impacted by tariffs.

• Parts Supply Chains: Keep an eye on parts delivery times and availability. Delays could signal supply chain tightening.

• Consumer Sentiment: Stay tuned into local market behavior. Early buying surges could give way to slowdowns if prices start to rise.

• Margins: Higher wholesale prices may put pressure on both new and used vehicle margins. Adjust pricing strategies thoughtfully.

Monitoring The Impact

It’s still too early to know how tariffs will ultimately play out at the dealership level. So far, the impact has been limited, but smart dealerships are watching the data, staying nimble, and preparing to adapt quickly if needed.

We’ll continue monitoring the situation closely and sharing updates as we learn more. As always, if you have questions about how to prepare your dealership’s financial strategy for potential market shifts, reach out to our team.