Tariff Sales Rush Cuts Supply
A sales increase in March cut into existing vehicle inventories ahead of U.S. trade tariffs’ effects.
Pexels/Tom Fisk
Industry analysts at Cox Automotive, after a March surge in new-vehicle sales as consumers rushed to beat trade tariff impacts, expect continued strong spring sales that will further eat into existing inventory.
Days’ supply fell during the month from 89, or about three months of supply, to 71. Meanwhile, used-vehicle inventory dwindled to 38 days, though Cox pointed out that’s typical with the annual spring sales bump.
Supply conditions varied widely by brand based on inventory levels before the rush. Cox says Ford, Mazda and Hyundai inventories were all at more than four months’ worth as the month opened, while Stellantis-owned Jeep and Ram were slightly under that, and Toyota, Honda and Subaru supplies were much lower.
A key inventory metric to watch, though, will be the more affordable, high-volume models, which will be particularly vulnerable to the 25% U.S. trade tariff on imported vehicles that took effect on April 3.
Cox estimates that over 40% of 2024 new-vehicle sales were models priced under $40,000, far below the $48,000-plus average, and sees almost 80% of models under $30,000 being subject to the tariff.
It calls the new conditions “uncharted territory” and estimates that affected vehicles’ prices will rise 10% to 15% at a time that consumers were still adjusting to pandemic-era price inflation, albeit inflation that had calmed over the past two years. It also predicts 5% price increases for vehicles not subject to the full tariff.
With the tariffs, U.S. President Donald Trump is targeting increased U.S. vehicle production and also cites national security as a motivating factor. Cox urges a more thoughtful approach.
“We support manufacturing vehicles within the United States; however, it is important to acknowledge that such transitions require time and investments, which are certainly possible, but all begin with long-term stability in policy and consistent rulemaking at the borders,” said Executive Analyst Erin Keating. “The rollout of massive new tariffs at the U.S. border has been anything but.”