CHARLOTTE, N.C. (WBTV) – Although several significant tariffs scheduled for implementation this month have been postponed, a broad-based tariff of 10% still applies to all imported goods. A 25% tax on cars And specific automotive components are already causing disruptions within the automobile sector.
According to local dealers, this indicates that higher prices are nearly inevitable in the near future for both new and used cars.
Jim Keffer, who owns the Keffer Auto Group operating numerous dealerships throughout the Charlotte region—featuring makes such as Dodge, Jeep, Kia, Mazda, and Volkswagen—notes that the present situation seems strikingly reminiscent.
I believed that COVID was the kind of occurrence one might only see once in their lifetime," Keffer stated. "It's somewhat intriguing that we're now facing another situation that could appear quite similar to that for our clients.
Keffer stressed that the volatility isn’t merely annoying; it’s making effective planning almost unfeasible.
We're operating in a highly changeable setting," Keffer quipped. "Today's choices work fine until 4 p.m., but after that, he'll probably come up with something new.
He mentioned that the President’s choice to halt extra tariffs on Wednesday could reduce short-term stress on customers, though the current duties continue to be a matter of worry.
Some manufacturers like Ford , have introduced measures to adjust consumer prices, but Keffer stated that this does not ensure stability for dealers who are forced to make significant financial choices without proper information.
You could essentially be signing a blank check for the upcoming shipment of vehicles," Keffer stated. "Should I place an order for cars or trucks, or should I refrain from ordering at all? This situation presents significant challenges and involves making high-stakes choices.
As per Keffer, many dealerships currently possess stock that was ordered prior to the implementation of tariffs. However, once these inventories are depleted, future vehicle prices are expected to rise.
Even automobiles manufactured in the U.S. are not exempt. Today’s cars consist of thousands of components sourced from international suppliers, and Keffer points out that there isn’t really a "100% American car."
A domestic brand such as Ford or GM... they all include some degree of foreign components," he stated. "Therefore, there's truly no means of claiming, 'I'll be secure.'
Keffer pointed out that manufacturers typically work with roughly a 10% profit margin, whereas dealers usually see an even smaller return of about 2.5%. According to him, imposing a 25% tariff might render these margins unviable.
If an average car costs $40,000, that represents a $6,000 impact per vehicle," he stated. "I do not foresee manufacturers bearing this cost indefinitely.
Consequently, Keffer thinks this might be the optimal moment for hesitant buyers to make their move. Numerous producers are providing staff discounts or special promotions before these price adjustments affect the entire distribution network due to impending duties.
If you're genuinely considering buying, now might be an acceptable moment to proceed," Keffer suggested. "Certain brands present genuine deals ensuring dealers aren't increasing prices based on current market conditions.
Pre-owned cars aren't immune to cost increases as well. When the prices of new automobiles go up, buyers might turn to used alternatives instead, boosting their demand which consequently drives their costs upward—much like what happened during the pandemic era.
We observed this occur during the pandemic," Keffer stated. "When the cost of new cars increased, the price of used ones rose as well. Dealers are actively bidding against each other at auctions, causing prices to escalate rapidly.
However, for Keffer, the difficulty extends beyond finances; it's also about navigating through uncertainty as a leader. He emphasizes that the crucial aspect for every entrepreneur is maintaining composure and seeking out opportunities within the turmoil.
The primary rule is: stay calm," Keffer stated. "There's always a possible positive outcome. It's our duty to identify excellent deals for our customers, and if we accomplish this, those who collaborate with us will be fine.
Keffer additionally stressed that the ones bearing the cost of these duties aren’t foreign governments but rather the manufacturers themselves. By the time the car arrives at the dealership, those expenses have been factored into the final selling price.
This idea that the Chinese or Japanese will bear the cost of a tariff is incorrect," he clarified. "It's actually the importer who pays it. In this case, it's the manufacturer. They then incorporate this cost into their prices, which we subsequently pass on to consumers.
Amidst the uncertainties, both sellers and vehicle purchasers find themselves traversing a volatile path forward. However, for the moment, Keffer states, one matter is evident:
There will inevitably be some discrepancy," he stated. "It could be with used cars, leases, or another area; our task is to uncover it.