With the threat of tariffs looming, the used vehicle industry saw a rise in sales as March ended.
Data shared by Cox Automotive during Monday’s first quarter Manheim Used Vehicle Index call showed used retail sales spiking at the end of March and into early April. But Cox Auto Chief Economist Jonathan Smoke cautioned the rise could be short-lived.
“We thing sales are in for a roller coaster ride,” Smoke said. “It wouldn’t be impossible to have a similar [seasonal adjusted rate] in April as we had in March, but that’s probably all the market will be able to provide.”
Smoke added higher prices and limited inventory will weaken demand.
“How long do we see this demand persist in the short term? It’s probably two months,” he said.
Throughout the first quarter, Manheim noted used retail sales outpacing sales for the past three years.
“Sales have been strong since January in the used retail vehicle market boosted by tax refund season and now some amount of urgency spilling over,” Smoke said.
The tariffs are expected to raise prices in the used vehicle market, with a 25 percent tariff set to go into effect on many imported auto parts May 3. The list of parts impacted was recently published in Annex I of the Federal Register Notice. The parts on the list include hoses, tires, suspension, lights, body parts, transmission, engine components and more, based on the Harmonized Tariff Schedule of the United States (HTSUS) numbers included in the order on pages 11 and 12.
Smoke said auto parts tariffs will eventually impact prices for vehicles assembled in the U.S.
“A May 3 date was set to have many auto parts also covered by a 25 percent tariff, which we think will add about $3,600 to the average U.S. and worse would lead to a disruption in the U.S. production,” he said.
Manheim noted prices on the wholesale market in the first quarter remained near averages and the wholesale supply was a 23.3 days at the end of March.
