This article was updated on April 2, 2025. The situation may continue to evolve – please check out the most up to date information via Automotive News.
The Auto Industry Faces Changes as Tariffs Take Effect
On April 3, 2025, the United States officially implemented a 25% tariff on imported vehicles and key automotive parts from outside the U.S., escalating trade tensions and creating immediate challenges for car dealerships. Additionally, select parts—including engines, transmissions, powertrain, and electrical components—will face new tariffs by May 3.
This change marks a significant shift in U.S. trade policy and is expected to raise vehicle prices, create delays in supply chains, and disrupt profitability for dealerships nationwide.
Understanding the Tariff Impact on Auto Dealerships
What’s Changing?
The newly implemented tariffs target a wide range of imports used across North American auto manufacturing. Key updates include:
- 25% tariffs on vehicles and parts built outside the U.S.
- Targeted parts tariffs set to take effect by May 3, 2025
- Potential retaliatory tariffs from Canada, Mexico, and other trade partners
Analysts expect average vehicle prices to rise by $4,000 to $10,000, with added strain on the cost and availability of parts.
How Will This Affect Auto Dealerships?
- Rising Vehicle Prices
Manufacturers are likely to pass tariff-related expenses downstream to dealerships and customers, increasing sticker prices and potentially slowing consumer demand. - Supply Chain Disruptions
Parts that cross borders multiple times before final assembly may face delays or shortages, leading to production bottlenecks and dealership inventory gaps. - Higher Costs on Auto Parts & Repairs
Service departments will feel the effects of increased costs for brake components, fasteners, electronics, and other high-turnover items. This could impact profit margins and customer satisfaction.
How Dealerships Can Protect Their Bottom Line Amid Tariff Changes
With rising costs and market uncertainty, dealerships must focus on controlling expenses wherever possible. While tariffs are out of your control, managing operational costs is not.
- Streamline Procurement: Work with a Group Purchasing Organization (GPO) like Dealer One Stop to lock in pre-negotiated rates on essential dealership supplies, helping offset price increases.
- Optimize Inventory Management: Avoid overpaying for parts and supplies by leveraging vendor-managed inventory programs to reduce waste and streamline procurement.
- Cut Unnecessary Costs: From technology to office supplies, small savings across multiple categories can add up and help dealerships maintain profitability.
Partner with a Group Purchasing Organization to Reduce Costs
As the auto industry faces uncertainty, controlling operational costs is more critical than ever. Dealer One Stop helps dealerships navigate rising expenses by providing access to pre-negotiated pricing on essential supplies—from auto shop tools and chemicals to office supplies, technology, and breakroom essentials.
