⚡ Market Pulse: Tariffs spur 'mad rush' for new car sales—but what follows?

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— CDG

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New retail sales: 
↑ 28.2% MoM | ↑ 13% YoY

March is typically a strong season for car sales—but this year’s forecast is boosted by a wave of buyers looking to beat tariff-induced price hikes, according to J.D. Power.

For dealers, it’s a shiny opportunity to move inventory quickly—but it also means potential lulls could follow. Having sharp strategies helps prepare for both.

New car prices: 
↑ $230 MoM | ↑ $637 YoY

With solid sales and high transaction prices (forecasted at $44,849 in March)—analysts say more money was spent on new cars this March than any other March on record, according to J.D. Power.

However, this “mad rush” isn’t expected to last.

And if tariffs push average new car prices above $50,000, which Cox Automotive says is likely, more consumers are projected to turn to the already supply-strained used car market.

And the cycle begins…

Retail inventory: 
↑ 3.7% MoM | ↑ 31.3% YoY

Retail new car inventory (forecasted at 2.2M in March) is also rising across the board, and could provide a brief buffer against any price hikes.

But discounts are mixed.

Incentive spend: 
↓ $102 MoM | ↑ $235 YoY

The good: New car sales had a solid start to 2025—with 3.83M vehicle sales estimated in Q1.

The bad: With manufacturing costs expected to rise, incentives could be the first thing automakers take off the table.

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Zooming out: Nearly half of U.S. light vehicle sales could be hit by tariffs

President Trump has made it clear he intends for his proposed auto tariffs to be “permanent.”

And a major industry shake up is around the corner if true.

Just last year, 46% of U.S. vehicle sales in 2024 were imported—mainly from Mexico, South Korea, Japan, and Canada.

The other 54% were produced in the U.S.

S&P Global Mobility expects steep tariffs to stick, with few carve-outs—potentially slashing North American production by up to 20,000 units a day and triggering ripple effects across the industry.

The winners and losers: (insulated/exposed)

Nearly all vehicles sold in the U.S. have foreign components in some capacity (and will be subjected to tariffs)—but brand by brand, the severity will look wildly different.

• General Motors, with just 45% of its vehicles built in the U.S., faces major risk.

• Porsche could lose up to 25% in profits by 2026 due to its reliance on imports, per Bloomberg.

• Even BMW and Mercedes-Benz—despite having U.S. plants—still ship key components from Germany, keeping them exposed.

Others are better positioned.

• Hyundai’s $21B U.S. investment softens the blow but doesn’t eliminate it.

• And with 80% of its vehicles made domestically, Ford it’s mostly shielded—though Mexican-built models like the Maverick and Bronco Sport will still feel the heat.

The big picture idea is that pending auto tariffs will boost domestic manufacturing in the long term—but the short-term impact is what consumers are prioritizing today.

That said, even with the uncertainty—it seems some OEMs are using this time to offer a listening ear to its dealer base…

Tariffs are hitting every corner of the industry—and no one’s immune.

Half of U.S. vehicle sales are exposed, OEMs have mixed strategies, and consumers are rushing to buy out of fear.

The result? A short-term demand spike, but the start of a deeper affordability crunch.

If OEMs act with smarter production, better incentives, and real dealer alignment, we might come out more efficient. But it’ll take urgency and clarity from the government to get there.

Thanks for reading everyone.

— CDG