DETROIT – The inventory of new and used vehicles available for sale in the United States is rapidly diminishing as buyers rush to acquire cars and trucks ahead of anticipated price hikes associated with tariffs, as reported by auto dealers and industry analysts.
The days’ supply of new vehicles—determined by an estimated daily retail sales rate—fell from 91 days at the start of March to just 70 days this month, according to analysis from Cox Automotive. On the used vehicle side, the already low supply decreased by four days, now sitting at 39 days, the firm noted.
“Consumers are trying to get ahead of tariffs on imports,” stated Jonathan Smoke, Cox’s chief economist, during an online briefing on Tuesday. “The decline in new vehicle days’ supply marks one of the most significant decreases we’ve observed in several years.”
This sharp drop is notably greater compared to the typical monthly changes of approximately 5 to 7 days under normal market conditions, according to Cox.
New vehicle sales are currently running 22% higher than the seasonally adjusted rate from the previous year and have increased over 8% on a year-to-date volume basis, Smoke remarked. The used vehicle market is also seeing a significant uptick, with sales climbing by 7% compared to last year.
While rising sales figures are beneficial for the automotive sector, many analysts anticipated the market would maintain a steady pace in 2023. There are, however, concerns that once manufacturers and dealers exhaust their tariff-exempt stocks, sales could dramatically slow.
The auto advisory group Telemetry predicts that increased production costs, combined with other economic factors, could lead to up to 2 million fewer vehicles sold annually in the U.S. and Canada due to higher prices.
Read more
While automakers and suppliers might absorb some of the increased costs, they are also likely to pass these expenses on to consumers in the U.S., potentially resulting in decreased sales, analysts warn.
Many manufacturers had stockpiled inventories of imported vehicles prior to the implementation of President Donald Trump’s 25% tariffs on imports on April 3. However, some manufacturers have adjusted their import strategies, holding vehicles in ports or ceasing them altogether, as evidenced by Jaguar Land Rover’s actions.
General Motors has increased certain U.S. production, ramping up output at a pickup truck plant in Indiana and canceling previously planned downtime at a Tennessee facility.
Ryan Rohrman, CEO of the Rohrman Automotive Group based in Indiana, indicated that April began on a strong note, showing a mix of purchases driven by tariff concerns along with better inventory levels than in recent years.
“Business is strong right now,” remarked Rohrman, who oversees 22 franchises. “March was excellent, and the momentum has continued.”
Automakers such as Ford Motor and Stellantis have leveraged the tariffs to reduce their inventories through “employee pricing” discounts to customers.
Nick Anderson, general manager of a Ford dealership in Missouri, noted that these unique discounts, combined with rising fears of price increases due to tariffs, have attracted more price-sensitive customers to his showroom. Although this influx is beneficial for sales, it has adversely affected the dealership’s profit margins.
“We are on track to at least match last year’s performance,” he said. “Most customers are more focused on pricing… Our sales volume is steady, but profit margins are thinner. It’s a different customer base.”
Anderson remains optimistic about the sales outlook for the year, though he emphasizes that it heavily relies on developments related to tariffs in the upcoming 60 to 90 days.
On Monday, Trump indicated his intention to “help some of the car companies,” although he did not provide details on how that would unfold.
During the automaker’s annual meeting on Tuesday, Stellantis Chairman John Elkann expressed encouragement in response to Trump’s comments, highlighting that the 25% tariff on imports and strict emissions regulations in Europe pose significant risks to both markets.
