Tariffs on parts and imported cars don’t mark the industry’s demise.
The pandemic gave us a brutal reminder that the automotive industry has always been at the forefront of large-scale disruptions. When the first lockdowns hit, manufacturers, suppliers, and dealers scrambled to predict the future. Would supply chains ever recover? Would consumer behavior permanently change?
Fast forward to today, and while much of life has returned to pre-2020 norms, the aftershocks of global disruptions continue. The lesson? Change is inevitable in the automotive industry. Remember when the Big 3 fell? We don’t even need to go back in the archives to think of scandals, lawsuits, strikes, and the tumultuous nature of electric vehicles (Are they in? Are they out?).
Tariffs are the latest challenge we face, though it’s undeniably a big obstacle to overcome. While it might not be the biggest thing to hit the industry we’re not hopeless.
How Tariffs Impact The Automotive Industry
Effective April 3rd, 2025, a 25% tariff on imported automobiles and key auto parts has been imposed. The aim of the tariff is to boost domestic manufacturing and address trade imbalances.
The policy will affect auto manufacturers to varying degrees. Brands that rely heavily on imports, like Mazda and Volvo, are expected to be particularly affected, while domestic automakers like Ford and GM won’t be impacted as much. Potentially leading to significant price increases for certain brands.
Steel and aluminum are the backbone of automotive production. From body panels to engines to safety structures, these metals are critical to building and maintaining vehicles. A 25% tariff means higher costs for manufacturers, which will inevitably trickle down to dealers and consumers.
In the short term, sales are soaring. Consumers who anticipated the rise in new vehicle prices rushed to buy a car before the trickle-down effect hit home. For example, Hyundai reported a 15% increase in March sales, making it a record month.
Will automakers absorb costs, pass them on, or cut production? Will alternative materials rise in demand? Today, we can only speculate. Still, adaptability is the industry’s hard-earned motto.
The best way to prepare is to take proactive steps today. Dealers who want to stay profitable should only focus on moving forward.
Source and strengthen domestic relationships. Wherever possible, foster relationships with local suppliers and negotiate pricing.
Plan for possible cost increases. Now is the time to solidify alternate streams of income to make up for any potential losses dealers may face. Consider e-commerce parts stores, bolstering your accessory sales in-store as well as online, and utilizing free marketing like social media.
Expand service and repair options. If new car sales slow, focus on maintaining and servicing existing vehicles.
Stay informed and agile. Monitor policy changes and industry trends to make data-driven decisions.
Tariffs are another wave in the ever-changing automotive landscape. And as an industry, we can’t respond to chaos—we should find solutions. The best way to prepare for uncertainty isn’t panic; it’s smart, calculated decision-making. By cushioning profits where possible and staying flexible, we ensure that no matter what happens next quarter, we’re ready to ride the wave.
Insignia Group Can Help
Today, accessory sales are better positioned for success as customers research their options. The ability to add an accessory to the car digitally and view it from multiple angles is more attractive than ever. Customers can toy with accessory packages without pressure from a salesperson. Presented correctly, accessory sales will skyrocket along with online car purchases.
Our integration with major digital retailers covers all your bases and allows for a seamless transition when customers decide to come into the store. Schedule a discovery call with us today to see how Insignia Group can support your accessory content today.