Car dealerships across the U.S. are enticing buyers with "pre-tariff sales" ahead of the expected price hike from the Trump administration's 25% tariff on imported vehicles.
Even before the policy took effect at the beginning of April, the rate of new vehicle sales in the U.S. surged 17.2% at the end of March compared to late February, according industry analyst Cox Automotive. In early March, the inventory of new cars on the average dealer's lot was lasting 91 days. By the end of the month, it only was lasting 71 days.
MORE: Cupid's Bookshop in Manayunk will be a safe space for romance lovers
"It's no different in this region," Mike Gempp, executive director of the Auto Dealers Association of Greater Philadelphia, said Friday. "Talking to the different dealers we represent, everybody for the last two weeks of March just saw an influx of consumers coming in to buy. Much like business people, consumers don't want to live in a world of uncertainty."
Prices of new imported cars are estimated to increase $5,000-$10,000 over the coming year as the market absorbs the impact of the tariff, according to the Kiplinger Letter, an economic forecaster. Domestic-made vehicles, which rely heavily on imported parts, could be hit with an additional 25% tariff on foreign auto parts as soon as May 3. The price of American-made models could rise by about $3,000.
Gempp, whose association represents about 190 dealer lots in the Philly region, believes the brisk March sales are part of an "artificial surge" that will be short-lived.
"It's a push ahead," he said. "It's not additional sales that are going to somehow push us into record sales for the year. It's a sugar rush. Consumers are coming out and buying now, because they're concerned, and we're going to see a slowdown inherently going through April, May and June."
Gempp and his staff spent the week attending the New York Auto Show, where talk about the tariffs was inescapable. At a day-long forum on Tuesday, industry leaders discussed the shifting landscape for auto manufacturers and how tariffs will affect dealers who buy from them.
"For now, the manufacturers have been absorbing these tariffs," Gempp said. "Different manufacturers are coming out with guidance on how long that will last and how long they will keep prices steady. Inevitably, the consumer is going to feel the hit at some point, because the manufacturer and dealers — if these tariffs stay in place — are in no way going to absorb the full 25% tariff."
The Trump administration has indicated it may pause the tariff on imported auto parts and carve out exemptions to allow car manufacturers time to adjust their supply chains. Many automakers also are unsure whether they will receive immediate breaks on tariffs if they commit to invest in U.S. production, a process that can take several years to get plants up and running.
As consumers rush to buy cars before prices climb, the drain on supply is a double-edged sword for busy dealerships running out of inventory already in the U.S.
"It's hard to get a consumer to understand what is a day's supply of these vehicles without the tariffs attached to them," Gempp said. "It's going to be variable by each manufacturer and every day it gets a little less because people are buying more."
In the months ahead, Gempp said automakers likely will pause bringing some car models into the U.S. Some may go away for a while as manufacturers gauge what they can produce and what they expect to be able to sell once tariff costs are passed on to dealers and consumers.
Dealerships anticipate the used car market will see a surge in demand as new car prices rise. Many dealers are holding on to used cars longer than they normally would before sending them off to auction, and competition for used cars could rise much the way it did when vehicle production slumped during the COVID-19 pandemic.
Gempp said it's wise for consumers to weigh buying now before dealers are confronted with supply complications and tariff pricing. Even without buying a new vehicle, car owners are likely to see insurance and repair costs rise as tariffs put upward pressure on replacement parts.
"In most people's world, a car is the second-largest purchase they're going to make outside of their home," Gempp said. "It's not something you want to go jumping into, but if the need is there and you feel your finances are in place to make the purchase reasonably, pushing it ahead would certainly make sense for a lot of people."
