Car Dealers Fret Over Possible Tariffs, Survey Shows

Surveyed U.S. auto dealers cite vehicle import tariffs and inventory availability as looming concerns in what they see as an otherwise bright market, according to the latest Cox Automotive Dealer Sentiment Index.

Only 11% of all dealers (franchised and independent) believe tariffs on imported vehicles and parts would help their business, while 38% anticipate a negative impact. Fifty-one percent believe tariffs would have no effect.

Franchised new-car dealers are more pessimistic, with 56% believing tariffs would hurt their business. Of franchised dealers who feel negatively toward tariffs, 66% believe consumers will face higher prices on all new vehicles, not just imports.

The White House has threatened a 25% tariff on non-U.S.-made vehicles. However, some observers say that’s more of a negotiating tactic than an imminent reality.

“While they are positive on today’s business, the new looming threat is the negative impact of proposed tariffs on imported autos and parts,” Cox Automotive Chief Economist Jonathan Smoke says of dealer sentiment.

He adds, “And, for the first time, dealers indicate that limited inventory is the No.1 obstacle holding back business.”

The percentage of franchises citing limited inventory as a negative factor increased 12 percent points in the past year – to 28%. Cox says this increase is significant, as franchise dealers in general are less likely than independents to cite limited inventory as a factor holding back their business.

Cox surveyed dealers between July 31 and August 13. “Dealers continue to report strong market conditions in the third quarter, with few material changes in key performance indicators from the spring, when we reported record-high sentiment,” Smoke says.

The overall bright outlook is considered typical of auto retailers. “Dealers are the most optimistic group of people you’d ever meet,” says a Cox spokesperson.