Car dealers, smashed by the tariffs in the industry by President Donald Trump, are already seeing a more stringent vehicle supply at the time sticker prices for many models are scheduled to rise.
Pine Belt Subaru, located in Lakewood, New Jersey, typically receives 100-120 cars a month. This month, the dealer received only 18. This means that lots fade towards the usual busy seasons from May to August.
“We need stock. We need to fill the shelves with vehicles,” said Dan Ariel, director of Pine Belt Auto Group. “If the factory is not offering us vehicles now, that’s definitely a concern.”
This means that customers looking for a particular car of a particular color may have difficulty finding it when the automaker tightens the spigot with delivery. Ariel said consumers rushed to the showroom following the late March announcement of a 25% tariff on imported vehicles when citing stock concerns as a urgent reason.
On May 3, the administration was stacked on another layer of import taxes, this time on auto parts. Currently, companies must also pay 25% to import parts from overseas, but the White House has made last-minute changes to avoid these additional costs that “stack” over other tariffs like steel and aluminum. The administration has also temporarily offered carmaker refunds for some tariffs of up to 3.75% of the value of US-made cars for a year.
“It gave them the opportunity to build a car parts factory,” Trump said in the oval office at a meeting Tuesday with Canadian Prime Minister Mark Carney.
However, vehicle shipments have already been tightened. According to Cox Automotive, dealers in April only had enough new cars to last around 60 days from their average supply of 80 to 85 days.
That’s not as bad as the shortage seen in 2022, but when the global supply chain threw inventory levels below 40 days, Cox’s senior director, Erin Keating, said the vehicle stocks still look “depleted.” This is part of consumers buying ahead of tariffs, as many automakers are reducing or suspending cargo to dealers while they strive to exceed production and prices.
Stock required. The shelves must be filled with vehicles.
Dan Ariel, Pine Belt Auto Group, Lakewood, New Jersey, Director
Many vehicle manufacturers “keep them at the border before they move on and assign them to dealers,” Keating said.
This uncertainty clouds the guidance of major automakers to Wall Street last week as General Motors lowered its financial forecast for the year, but Ford refused to provide Monday’s forecast at all. GM estimates a tariff hit of as much as $5 billion, but Ford says it could be affected by as much as $2.5 billion.
As carmakers now pay an additional 25% to bring their finished cars to the US, the chicken game began when they handed out some or all costs to consumers in the form of a higher “Manufacturer’s Recommended Retail Price” (MSRP). This lifts the floor for pricing that car dealers use when selling to future car buyers.
“I hope the manufacturers don’t raise prices. If they don’t increase, it’s business as usual,” Ariel added last week that he hasn’t raised prices in his lot yet. Still, he warned that “if a manufacturer decides to tackle tariffs on prices, it must naturally be handed over to the consumer.”
Even with Trump’s latest revision to his car rates, the price of the new vehicle could increase by up to $12,000, according to Anderson Economic Group Consulting Company estimates.
However, for now, many automakers seem to be taking the cautious approach. Both Stellantis and Ford said they would offer employee pricing for several vehicles by at least June, and Hyundai has pledged not to raise prices until at least early June.
The industry as a whole, automakers appear to be holding back on MSRP adjustments, but that could change when inventory is low, high demand from consumers and increased manufacturing costs due to tariffs arrive.
“Unless we start increasing the supply and demand dynamics that are ECON 101, we don’t think we’ll see any astronomical price rise anytime soon.
Pinebelt Subaru at Karin Weinert in Point Pleasant, New Jersey, drove lots on Friday with the brand new Subaru Forester.
“I knew waiting wouldn’t work. I knew things would be high for a while. I know that,” she said.