Industry Expects Tariffs to Boost Prices

The threat of new tariffs on goods from Mexico, including automobiles and auto parts, is on hold for now, but manufacturers and dealers continue to worry about the impact of trade conflicts on their business.

Tariffs could even affect the used-car market.

Cox Automotive recently survey dealers on their expectations of the impact of proposed tariffs on their businesses.

Only about a third of dealers overall expect a negative impact from tariffs on imported automobiles and parts.

However, more than half of franchise dealers continue to expect a negative impact on their business and profitability from new tariffs. Their principal concerns are about higher prices.

As compared with results from the first quarter, more independents and more dealers in low tax states expect that tariffs could have a positive impact by making the auto market stronger overall.

Tom Kontos, chief economist for KAR Auction Services Inc., said tariffs would likely boost used-car prices as more consumers turn to pre-owned as new-car prices increase.

Anil Goyal, executive vice president of operations, said used-car prices should continue to soften otherwise.

“We don’t expect the strong spring season to influence the trend in the coming months,” Goyal said. “The overall depreciation to fall further in 2019 compared with last year.

“However, all bets are off if tariff threats become reality, significantly impacting the auto industry.”




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Last modified on Monday, 17 June 2019 13:19