Estimated read time: 2-3 minutes
- Auto tariffs may increase used car demand, raising prices and repair needs.
- One industry expert predicts new car prices will rise, affecting consumer purchasing behavior.
- Another expert expects more remanufacturing, with potential savings on parts but higher labor costs.
OGDEN — Colby Sherman grew up around the family car sales business and has seen a lot of changes, but he says what may come of 25% tariffs that are set to go into effect Wednesday on imported cars and parts is still uncertain.
"It all depends on consumer behavior," Sherman said. "If consumers make a run on getting a good buy while they can, the inventory is going to be limited, and that will push others to go used, and that will cause the used purchase prices to rise."
Sherman is the owner of Auto Group Direct and the treasurer of the Independent Automobile Dealers Association of Utah. He believes the tariffs are likely to hit the larger new car dealerships harder.
"The manufacturers aren't going to just eat that," Sherman explained. "They're going to pass that on to the consumer, so new car prices will go up."
He adds those factors could cause more people to hold onto their cars longer and draw more people into the used car market. David Johnson, CEO and president of the National Institute for Automotive Service Excellence, says as tariffs increase, the price of what once were cheap parts from China rise, so we're likely to see more repair shops opting to rebuild larger components.
"We used to do them back in the '70s and '80s," Johnson said. "They repaired the internals of those components. And then you'll see potentially more remanufacturing as well, which is done locally. (You) still need new parts to inject into those components, but you get a nice in-between."
Along with that, Johnson says you'll likely see some savings on parts while having to pay more for labor.
"The market finds a way in which there's lots of competition in the automotive repair space, where they'll try to do everything they can to keep those prices as low as they can," Johnson said.
Sherman and Johnson also both added that they believe the change will ultimately prove better for the U.S. economy in the long run, though the tariffs could mean several years of some pain.
When asked about the tariffs, Craig Bickmore, executive director of the New Car Dealers of Utah, said he didn't want to speculate on what impacts could come, but said the market is in much better shape than it was during COVID-19, as new car dealers have high inventory levels right now.
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