As President Donald Trump’s tariffs on imported vehicles take effect, a wave of urgency is sweeping across U.S. car buyers, driving a significant drop in vehicle supplies. Auto dealers and industry experts report that consumers are flocking to purchase cars and trucks ahead of potential price hikes, resulting in a rapid decrease in both new and used vehicle inventories. With concerns about higher tariffs pushing prices upward, this trend shows no signs of slowing down.
Sharp Decline in New and Used Vehicle Supplies
According to data from Cox Automotive, the supply of new vehicles in the U.S. has dropped sharply, with the days’ supply falling from 91 days at the beginning of March to just 70 days in April. Used vehicle supplies have also seen a decline, down four days to 39 days. Cox’s chief economist, Jonathan Smoke, attributed the sharp decline to consumer behavior driven by the expectation of rising prices due to tariffs: “Consumers are trying to get ahead of tariffs on imports,” he said. This decline in vehicle supply is one of the most significant the industry has seen in years, with typical monthly supply changes being just five to seven days in a normal market.
Boost in Sales Amidst Uncertainty
The rush to buy cars has led to a surge in sales, with new vehicle sales running 22% above last year’s pace, and used vehicle sales up 7% compared to 2024. Despite analysts predicting a flat year for the automotive industry, these unexpected increases have created a sense of momentum. However, Smoke warns that the sales boom may be short-lived: “Once automakers and dealers sell out of their tariff-free inventories, sales could come to a grinding halt.” This fear is exacerbated by the anticipated higher costs of production and parts, which could reduce vehicle sales by up to 2 million annually in the U.S. and Canada, according to advisory firm Telemetry.
Tariff Impact on Vehicle Imports and Production
Automakers have made strategic moves in anticipation of the tariff changes. Many have built up inventories of vehicles before the 25% tariff on imported cars went into effect on April 3. However, some manufacturers, like Jaguar Land Rover, have halted or altered their imports entirely. Other companies, such as General Motors, have ramped up domestic production, with increased output at a pickup truck plant in Indiana and a canceled downtime in Tennessee. Ryan Rohrman, CEO of Rohrman Automotive Group, noted, “Business right now is actually pretty strong,” indicating a blend of tariff-driven urgency and improved inventories helping to maintain sales in April.
Pricing Pressures and Consumer Concerns
In response to the tariff-induced uncertainty, automakers such as Ford Motor and Stellantis have taken the opportunity to sell down their inventories through special discounts like “employee pricing” offers. Nick Anderson, general manager of a Ford dealership in Missouri, shared that although sales volumes remain strong, the dealership is seeing a more price-conscious clientele: “The majority of people we’re seeing are definitely more price-conscious… Our volume is there but the gross is down.” Anderson remains optimistic about the coming months, noting that the situation is likely to depend heavily on what happens with tariffs in the next 60 to 90 days.
Uncertainty Surrounding the Future of Tariffs
Amid the ongoing discussions, President Trump has suggested that he is looking to “help some of the car companies,” but has yet to provide details on what this could entail. Stellantis Chairman John Elkann expressed his encouragement about Trump’s comments, citing the significant risks posed to car markets by both the 25% tariff on imported vehicles and strict emissions regulations in Europe. As the U.S. auto market grapples with these uncertainties, the future remains unclear, and much will depend on how tariffs evolve and what actions are taken in the coming months.
A Critical Moment for the U.S. Auto Industry
The automotive industry is at a crossroads, with rising consumer demand driven by concerns over tariffs and higher vehicle prices. While sales are currently strong, the long-term outlook remains uncertain, as automakers struggle to adjust to new tariffs and rising production costs. How the industry responds to the next 60 to 90 days of tariff developments will likely determine whether this current surge in sales can be sustained or if the market will experience a significant slowdown.
