1 week Ago
Dealers are looking to sell as many vehicles as possible among inventory on the ground ahead of the ...
More imposition of import tariffs that are likely to trigger price hikes on some cars and trucks. There’s no time to waste to move the 60-to-90 days supply of cars and trucks on lots of the 22 franchises in the Rohrman Automotive Group . CEO Ryan Rohrman figures one the 25% import tariffs kick in on Thursday it will take two or three weeks before vehicles arrive that will cost more than those already on the ground.
The game plan for the Lafayette, Indiana-based dealer group? Sell as many pre-tariff cars as possible, says Rohrman, since he’s hearing the prices for vehicles subject to the tariffs will increase five-to-10%. Ryan Rohrman, CEO, Rohrman Automotive Group, based in Lafayette, Indiana. .
.. More “If the average car right now is just shy of $40,000 you're looking at potentially up to, like a $3,500- to-$4,000 price increase,” said Rohrman, in an interview.
“With the margins that we have on cars that would be very hard to sell if I have a pre-tariff car on the lot that's the same. I can't have a pre-tariff car compete with the same exact car that's $4,000 more.” Since dealers must pay steep insurance rates on every vehicle on their lots, there’s additional incentive to move them quickly, even if discounting shaves profit margins, Rohrman explained.
The result, a bit of a gold rush mentality among some consumers looking to score deals before pre-tariff inventories are sold out, giving first quarter sales numbers a late bump. Indeed, once Pres. Donald Trump announced on March 26 he was going ahead with the import tariffs it helped push new car retail sales up by nearly 30% month-over-month, according to a report released Tuesday by car shopping site CarGurus .
But once they kick in affordability of new vehicles, already at historic high’s becomes even more challenging for many consumers just looking for something they can swing financially. Chart from CarGurus 2025 Q1 Quarterly Review, showing how much average new vehicle prices could rise ..
. More with import tariffs. “Only 13% of new cars today are priced under $30,000, down sharply from 37% just five years ago—and that share is expected to shrink even further once tariffs are in effect,” wrote CarGurus director of economic and market intelligence Kevin Roberts.
“Shoppers hoping to lock in pre-tariff pricing on popular import models—many priced under $40,000—will face mounting pressure, especially with high-demand vehicles like the Toyota RAV4 and Honda Civic sitting at just about a one-month supply.” Cox Automotive senior economist Charlie Chesbrough warns, the opportunity to find pre-tariff bargains won’t last long. “I expect we’ll see relatively strong sales activity for a month or two, but prices will rise, and sales will slow noticeably before the end of Q2,” wrote Chesbrough in a report released Monday.
“Dealers and OEMs will be pulling back on incentives immediately as the rush to sell existing inventory declines. The value of an unsold vehicle on a dealer’s lot is now worth X% more since its replacement cost will be much higher.” The nature of the business is operating on thin profit margins.
When the market was disrupted during the Covid pandemic it resulted in a consolidation of the overall dealer network due to closings or takeovers by large groups. If sales and profits suffer due to loss of sales and the need to discount as the effects of import tariffs take hold, the situation could repeat itself. It’s already starting.
“Right now, it is an accelerant for groups that were already on the fence for considering selling because they know that this is not something that's going to go away tomorrow or next week or next month, because even aside from the tariffs, some of it is caused by the uncertainty with tariffs, but we still have, I would say, a questionable economic environment right now,” noted Brian Gordon, president of the Dave Cantin Group, which brokers dealership mergers and acquisitions, in an interview. A major challenge for dealers is Trump’s mercurial nature where he states a policy then changes his mind or alters his course of action. As Gordon points out, uncertainty stalls both businesses and consumers, creating an urgency to just know what’s actually going to happen.
“Just tell us what's happening so we can make business decisions,” said Gordon. “Because President Trump--whether he’s using something as a negotiation tactic and then backing off, or whatever it may be, finding that definitive, okay, this is how it's going to be for some period of time has been really challenging, not just with tariffs, but with a number of different, you know, policies.” One big business decision is whether or not to downsize staffing at dealerships should sales and profits sharply decline over the long-haul.
It’s something on the mind of Rohrman, thinking about his business’s 1,400 employees. “If that happens where we have to resort back to layoffs because of tariffs or whatnot, it would, it would definitely be something that I would not jump to do,” he said. “We spend so much time in training and hiring our employees, it would just be a shame to see that as a side effect of it.
” Right now Rohrman would just like to know what the automakers plan to do in terms of pricing and production. He said so far all he’s received are emails from two manufacturers with not much information. “None of the brands that we sell have given us any direction at all in terms of, even if something does happen or it doesn't what we should expect.
” Gordon says what dealers should expect is the need to roll with it and adjust, declaring, “Well, if these tariffs are here to stay, that just creates a new norm.”.
