The new 25% tariff on imported vehicles that took effect on April 3, 2025, is already pushing buyers away from new cars and toward used vehicles.

Yay! That’s good news right!?

Well, this shift is creating both challenges and opportunities for used car dealers here in North Carolina.

Tariff Impact Looming

Beyond the 25% tariff on imported new cars, President Trump has also announced plans to tariff car parts by May 3. These changes are already affecting the entire auto market in significant ways.

Industry experts estimate that the average imported vehicle could see price increases of around $12,500 for the new car market. This big jump in cost is pushing many customers to look at used cars instead. The situation feels similar to what happened during the pandemic, when factory closures and supply chain problems made new cars scarce and expensive.

It was good for used car sales but if you were in business then you know what came with that… scarce inventory and extremely high wholesale prices!

What Happens When the Rising Demand Meets Limited Supply?

Expect more customers at your lot while having fewer used cars available due to lower production from the pandemic paired with the high demand coming; Vehicles in the $15,000-$25,000 range will see highest demand.

North Carolina dealers need to prepare for a quick change in buyer behavior. Many customers who planned to buy new vehicles will now be looking at your lot instead. This increased demand is happening at a time when used car supply is already tight.

Jeremy Robb from Cox Automotive (in an article by Car and Driver) points out that the used car inventory has already been aging because production was lower in 2021 and 2022. Those vehicles are still working their way into the used market. This means dealers will have fewer newer used cars to sell just as demand increases.

The biggest impact will likely be on vehicles in the $15,000 to $25,000 price range. According to industry expert Sam Fiorani, this segment will see the highest demand increase. These vehicles offer the best value for customers who can no longer afford new cars because of tariff-related price increases.

This change is happening during what analysts call the “spring bounce” – typically a busy season for dealerships. Tax refunds often bring customers looking to buy, with sales usually peaking in late March. The tariff uncertainty is making some buyers rush their purchases, creating even more competition for limited inventory.

Which Used Vehicles in North Carolina Will See the Biggest Price Increases?

Lightly used low-mileage vehicles, trucks, full-size SUVs (“Margin Monsters”), compact SUVs, and hybrids will see the biggest price jumps and highest demand.

Not all used vehicles will see the same price increases. Understanding which segments will be most affected can help you plan your inventory strategy:

  • New used and off-lease vehicles with low mileage will likely see the biggest price jumps.
  • Trucks and full-size SUVs are expected to maintain strong demand and could see significant price increases.
  • Compact SUVs and crossovers will also see rising prices at auctions as dealers compete to stock these popular vehicles.
  • Hybrid vehicles may become more attractive to buyers who were considering electric vehicles but are now worried about battery tariffs.

Real-Time Pricing Strategies Are Essential for North Carolina Dealers

Don’t rely on 45-day-old pricing data; focus on the last 10-14 days of sales data for pricing decisions to avoid losing profit in this fast-changing market.

Dealers need to be extra careful about how they price used vehicles in this changing market. The old ways of setting prices based on what similar cars sold for last month won’t work when the market is changing so quickly.

Many pricing tools look back 45 days to set values, but this information is already outdated in today’s fast-moving market. As one expert puts it, “You won’t lose profit because the market adjusted. You will lose profit because your process didn’t.” (credit: Cars of Commerce)

Using real-time data is more important than ever. The last 10-14 days of sales data is what matters most right now, not what happened a month and a half ago. This means you might need to update your pricing tools or strategies to stay competitive.

Some dealers are already adjusting their tactics. Now is the time to have a plan of action in place.

What Inventory Should a North Carolina Dealer Buy Right Now?

Focus on American-made vehicles and understand the four tariff categories (0% tariff, 5-15%, 25%, and parts tariffs 10-25%) to make smarter inventory decisions.

Consider focusing more on American-made vehicles. Cars.com’s American-Made Index can help you identify which models have the most U.S. content. These vehicles might be less affected by price volatility and could be a safer bet for your inventory.

Think about which vehicles fall into different tariff categories. Industry leaders are dividing vehicles into four groups based on where they’re assembled and where their parts come from:

  • Category 1 (0% Tariff): U.S.-assembled with all USMCA (United States-Mexico-Canada Agreement) parts. These vehicles will be least affected by tariff-related market changes.
  • Category 2 (5-15% Tariff): Partial U.S. content with foreign components. These will see moderate price impacts.
  • Category 3 (25% Tariff): Assembled outside North America. These vehicles will see the biggest price changes.
  • Category 4 (Parts Tariffs 10-25%): Vehicles needing imported engines, EV batteries, or semiconductors. These will see varying impacts depending on parts content.

Understanding which used vehicles in your inventory match these categories can help you make better decisions about pricing and acquisition.

Communicating With Your Customers

Explain the connection between new car tariffs and used car prices; be honest that waiting might mean higher prices and less selection.

Your customers will have questions about how tariffs affect used car prices. Having clear, simple answers ready will help build trust and close sales:

  • Explain why used car prices are going up. Many customers might not understand the connection between new car tariffs and used car prices. A simple explanation can help them see why the market is changing.
  • Be honest about the supply situation. Let customers know that finding specific used models might be more difficult in the coming months. If they’re on the fence about buying, they should know that waiting might mean higher prices or less selection.

Long-Term Market Effects

Used car prices could remain elevated for years if tariffs stay; supply of affordable used cars (under $15,000) is already limited to a 30-day supply.

If tariffs stay in place for a long time, used car prices could remain elevated for several years. However, tariffs could also be revoked quickly, creating more market volatility. Planning for different scenarios will help your dealership stay flexible.

The average listing price for used vehicles recently stood at $25,006, showing a small 1% decline from the previous year. However, this slight downward trend might reverse as tariff effects spread through the market.

The supply of more affordable used cars is already limited. Dealers currently have about a 30-day supply of used cars priced below $15,000—about 12 days less than the overall supply of used vehicles. This segment could become even tighter as demand increases.

Cox Automotive estimates that a 25% tariff would increase the cost of vehicles made in Canada or Mexico by $6,000. These price changes will eventually affect the used market as these vehicles age and enter the pre-owned segment.

Here’s the Bottom Line

As new car prices rise, used car demand and prices will follow; success depends on using real-time data, focusing on the right inventory mix, and clear customer communication.

The used car market is entering a period of significant change because of new tariffs on imported vehicles. As new car prices rise, more buyers will look at used options, increasing demand when supply is already tight. This will likely push up used car prices, especially for newer models with low mileage.

Used car dealers who understand these changes and adapt quickly will be in the best position to succeed. Using real-time data for pricing, focusing on the right inventory mix, and communicating clearly with customers are all essential strategies for the months ahead.

Remember that market conditions are changing rapidly. What worked last month might not work today. Stay informed, be flexible with your strategy, and focus on the vehicle segments that offer the best opportunity for your specific market.

ADDITIONAL RESOURCES AROUND THE WEB

Here are some additional articles for more information. Many of these articles were used in the creation of our article.

  1. https://www.caranddriver.com/news/a64351714/used-cars-more-expensive-because-import-tariffs/
  2. https://www.livenowfox.com/news/auto-tariffs-what-it-means-for-carbuyers
  3. https://www.carscommerce.inc/tariff-strategy-playbook-for-automotive-dealers/
  4. https://www.reuters.com/business/autos-transportation/why-trumps-auto-tariffs-will-hurt-his-working-class-supporters-2025-03-30/
  5. https://www.reuters.com/business/autos-transportation/auto-tariff-cost-us-consumers-more-than-30-bln-first-year-report-shows-2025-04-03/
  6. https://www.coxautoinc.com/market-insights/auto-industry-braces-for-impact-25-tariffs-on-imported-vehicles-set-to-disrupt-market/
  7. https://abcnews.go.com/Politics/us-tariffs-imported-autos-effect-markets-reel-trumps/story?id=120431178