There has been a lot of discussion in the press recently about the various tariffs the President has imposed on China. They have extended across a range of products to balance the trade deficit and act as a catalyst to create a long-term trade agreement. While many of these tariffs are aimed at intellectual property related products, the 25% tariff on steel and 10% tariff on aluminum, are of greatest concern to the automotive industry. The flood of news stories has left many dealerships wondering if these changes will adversely impact their business in new car, used car, part sales, and maintenance services. According to the Cox Automotive Dealer Sentiment Index Q3, a majority of independent auto dealers expect the price of used cars to increase as a result of the changes. There were several other interesting insights revealed including the impact on domestic and imported vehicle sales. To help our clients and others understand the latest findings and how it may impact their business, Wilson Lewis has provided a summary of key survey findings below.
Key Survey Findings
Additional Insights
There appears to be a consensus among thought leaders in certain areas. According to the Center for Automotive Research, the tariff will result in an expected average increase of $6,875 in the price of new imported cars and a $2,270 increase for automobiles assembled domestically. Due to the increase in the cost of new automobiles, it’s also expected there will be an increase in the cost of used cars as demand increases. They also provided interesting statistics on the number of dealership jobs which will be impacted as well.
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The expected impact of the steel and aluminum tariffs on China will certainly influence automobile production prices and dealerships. Independent dealerships should consider how these changes will impact their business and make needed adjustments to capture the opportunity. If you have questions about this research or need assistance with an accounting or tax issue, Wilson Lewis can help! For additional information please call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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