By Ryan Farina, Founder & CEO of Data Driverz March, 1, 2025

The automotive industry is no stranger to uncertainty, but recent discussions around new tariffs proposed by former President Donald Trump could send ripples across the market—especially for used car dealers. If these tariffs come into play, the impact on vehicle pricing, supply chains, and consumer demand could be significant.

Understanding the Proposed Tariffs

Trump has floated the idea of imposing steep tariffs on foreign-made goods, including automobiles and auto parts. This is a continuation of his America-first trade policy, which previously led to tariffs on steel, aluminum, and Chinese-made auto parts. If re-elected, he has indicated he would implement a 10% across-the-board tariff on all imports, with a 60% tariff on Chinese goods specifically.

For the auto industry, these tariffs would likely affect:

• New Car Prices: Automakers who rely on imported parts or fully assembled vehicles from overseas would face higher costs, which could be passed on to consumers in the form of more expensive new cars.
• Parts & Repairs: Since many auto parts are manufactured in China and Mexico, tariffs would raise repair and maintenance costs, impacting service departments and used car reconditioning expenses.
• Supply Chain Disruptions: The industry already struggles with supply chain bottlenecks. Tariffs could exacerbate these issues, leading to delays in new vehicle production and inventory shortages.

What This Means for the Used Car Market

Whenever new car prices rise or availability tightens, the used car market feels the effects. Here’s how Trump’s proposed tariffs could shake up the space:

1. Increased Demand for Used Cars

If tariffs make new cars more expensive, more buyers will turn to used cars as an affordable alternative. This shift could drive up prices for used vehicles, especially for models that are already in high demand.

2. Higher Wholesale and Retail Prices

Dealerships that source vehicles from auctions or trade-ins may see increased wholesale prices, making it harder to acquire inventory at reasonable costs. In turn, these costs will be passed on to consumers, leading to higher retail prices.

3. More Profit Opportunities for Dealers

While higher prices can present challenges for affordability, they also create profit opportunities for dealers who manage inventory wisely. Understanding market trends and buying the right vehicles at the right time will be critical.

4. Service and Repair Costs Will Climb

Since many parts come from overseas, higher import costs will push up repair expenses. Certified pre-owned (CPO) programs could gain traction, as consumers may prefer a used vehicle with a warranty to avoid expensive out-of-pocket repair bills.

5. Leasing May Become More Attractive

If new car ownership becomes cost-prohibitive, leasing could make a comeback. This may help slow used car price inflation by ensuring a steady stream of off-lease vehicles entering the market over time.

How Dealers Can Prepare

With uncertainty ahead, data-driven decision-making is more critical than ever. Here’s how dealers can stay ahead of potential tariff-related disruptions:

Monitor Inventory Costs Closely – Stay ahead of wholesale pricing trends and stock up on models with strong demand before prices climb further.

Leverage First-Party & Market Data – Utilize insights from Data Driverz to understand which vehicles have the best turn rates and profit margins in your market.

Expand Sourcing Strategies – Look beyond auctions; increase trade-ins, buy directly from consumers, and explore alternative sourcing strategies to maintain profitability.

Optimize Pricing Strategies – Keep a close eye on pricing trends and adjust retail prices dynamically to stay competitive while protecting margins.

Final Thoughts

Trump’s tariffs remain uncertain, dealers must prepare for potential market shifts. Being proactive is key to success in 2025 and beyond.

At Data Driverz, we provide real-time insights to help dealers adapt, optimize inventory, and maximize profitability—no matter what the market brings.

Want to see how data-driven decision-making can future-proof your dealership? Let’s talk.

Written by Ryan Farina, Founder & CEO of Data Driverz

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