Auto tariffs may shift buyers to used cars, says NADA chief economist

NADA says the impacts from tariffs will likely hit dealers and consumers by summer. (3 min. read)

Author

Marcus Amick
April 22, 2025

NADA Chief Economist Patrick Manzi

The exact impact of the auto tariffs is still unclear at this point. However, the National Automobile Dealers Association contends that one thing is certain—the fallout on sales and production will be major.

The details: At the Finished Vehicle Logistics North America conference last week, Patrick Manzi, chief economist at the National Automobile Dealers Association (NADA), said the levies will significantly impact production and sales due to several key factors that are unavoidable.

  • A 25% tariff for auto parts imports to the U.S. (set to begin May 3) the one already in place on steel and aluminum will cause a rise of between $300 to $500 per vehicle.

  • That rise could drive up prices on U.S.-produced vehicles between $3,000 to $12,000 across OEM lineups, according to figures presented by Manzi.

  • The increase could raise average monthly payments to $830 from the current average of $738, based on the current average transaction price of $48,000 for a new vehicle.

Worth noting: Inflation could add additional market challenges, with expectations that it could rise from 2.4% in March to 4–5% in the summer once the tariffs are in full swing. Not to mention vehicle insurance rates, which are already up 55% since COVID, with the potential for tariffs on auto parts pushing those costs up even more. 

Why it matters: NADA suggests many consumers might be inclined to delay car purchases or opt for a used vehicle instead.

Zooming in: The impact on vehicle production and distribution is just as serious, according to NADA figures—leading to even bigger challenges down the road for U.S. dealers.  

  • Pauses on production and imports from Canada and Mexico from companies like Stellantis and Volkswagen will impact North American production, which currently stands at 63,900 a day, with 17,600 coming from Mexico and 4,600 from Canada.

  • Manzi noted that production of the Infiniti QX50 and QX55 SUVs—built at the Compass plant Nissan shares with Mercedes-Benz in Mexico—has been suspended because the vehicles will be subjected to a 55% tariff under the new measures.

What they’re saying: “We’re not really going to feel the sting of tariff vehicles on the ground in most of Q2 because [the dealers] have all these vehicles to work through right now, so it really doesn’t start to take effect until the summer. That is when we could start to see significant impacts to vehicle sales this year,” said Patrick Manzi, Chief Economist at NADA (via Automotive Logistics Media).

Bottom line: The NADA chief economist’s assessment of the tariffs’ impact on sales and production is a clearer indication of how the measures will disrupt the industry for automakers, dealers, and consumers.    

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