This article was updated on June 5, 2025. The situation may continue to evolve – please check out the most up to date information via Automotive News.

Auto Industry Braces for Full Impact as Tariffs Roll In

On April 3, 2025, the United States officially implemented a 25% tariff on imported vehicles and key automotive parts from outside the U.S. While initial fallout was limited to supply chain preparation and speculation, dealerships are now beginning to feel the pressure—especially as pre-tariff inventory phases out and new, higher-cost units arrive.

In early May, targeted tariffs on critical components like engines, transmissions, and electronics took effect, accelerating cost increases across the industry.

Here’s where things stand as of now.

Understanding the Tariff Impact on Auto Dealerships

While the tariffs officially began in April, most dealers haven’t felt the full effect—yet. But that’s expected to change in the coming weeks.

According to a recent Automotive News LinkedIn Live session, the true impact is now surfacing as tariffed vehicles replace those built pre-implementation.

Panelists highlighted that:

• Affordability is now the top concern for both dealers and customers – “Consumers are under enormous pressure,” noted Mike Maroone, CEO of Maroone USA.
• Consumers are already shifting to lower-priced vehicles, anticipating further price hikes.
• A record 20% of new auto loans now span 84 months, with an average loan amount of $41,473.
• The average U.S. light vehicle price is nearing $50,000, per Cloud Theory’s real-time tracker.

Industry experts, including Don Hall of the Virginia Automobile Dealers Association, warn that increased costs from tariffs will “raise payments,” making it harder to trade customers out of existing vehicles and increasing the risk of long-term negative equity.

What Dealerships Need to Know about Tariff Impacts

1. Vehicle Sticker Prices Are Set to Climb

OEMs will likely pass on added costs, pushing up vehicle prices by $4,000–$10,000 according to early forecasts. For context, Cloud Theory’s real-time 2025 vehicle price tracker reports that the current average marketed price for U.S. light vehicles is $49,873.

2. Parts & Service Department Costs Are Rising

Brake components, fasteners, electronics, and other high-turnover items are affected, squeezing margins in fixed ops.

3. Supply Chain Volatility Will Continue

Parts that cross borders multiple times before assembly are especially vulnerable to delays or double tariffing.

4. “Tariff Greed” is a Growing Risk

Some suppliers may begin charging inflated prices under the guise of tariffs—even if their goods aren’t tariffed. Dealerships must review contracts and invoices closely to avoid being overcharged.

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.