Podcast: Auto industry braces for tariff effects 

Before we dive in, a quick thank you to Earnix for sponsoring this episode.

Let’s get into it.

Tariffs are casting a long shadow over the auto industry, and with implementation set for April 3rd, we’ll be watching closely and keeping you updated. But here’s what happened last week:

Auto stocks tumbled after President Donald Trump signed an executive order on March 26th officially imposing 25% tariffs on foreign-built vehicles.

The Big Wheel Stock Index dropped 2.8% on the news, with major automakers hit hard. Ford stock was down 3.8%, shares of General Motors fell off 7.4%, and Stellantis shares dipped 1.2%.

Toyota and Honda also saw their share of decline, while Tesla gained 2.5% thanks to its U.S.-based assembly. Still, Chief Executive Elon Musk warned that Tesla won’t escape the impact entirely due to its reliance on imported parts.

Tariffs have also injected significant uncertainty into the market. Industry leaders say that the volatility is making it tough to plan—even for luxury brands that are better positioned to absorb the price hikes.

Analysts expect new vehicle prices could rise between $3,000 to $12,000 because of the impacts of tariffs, depending on the origin. That could drive more customers toward used cars, repairs, and U.S.-made vehicles, potentially boosting domestic demand.

Lenders like Tricolor, for example, are already preparing for increased costs—especially in parts and reconditioning—and are shifting sourcing strategies to stay ahead.

In the short term, we’re likely to see a surge in vehicle sales as buyers race to beat price hikes. But that momentum may slow heading into Q2, analysts say, as affordability worsens and incentives dry up.

Economists say the SAAR for March may also get bumped up higher because of the early buy rush, but that will be offset in later months.

Still, tariff complexity remains. What counts as U.S.-built isn’t always clear, as many vehicles assembled in the U.S. still rely on parts from other countries—such as engines or transmissions that could be made in Canada, Mexico, or elsewhere.

This means that much of the cost burden will most certainly land on consumers.

Meanwhile, amid the news, consumer sentiment took a hit. The University of Michigan Index fell to 57 in March, its lowest in over two years, as inflation worries and tariff concerns have mounted.

Long-term inflation expectations jumped to 4.1%, the highest since 1993, and short-term expectations hit 5%, the most since 2022.

On the auto finance side, industry health also declined despite stronger new vehicle sales.

The Auto Finance Composite Index dropped to 135.06—down 14% year over year and 3.4% month over month in February—reflecting ongoing market pressure.

One thing that helped drive this was auto loan rejection rates, which rose sharply—up 14% month over month and 1.5% year over year.

More consumers applied for auto loans, but expectations of denial also climbed to 33.5%, pointing to tightening credit conditions.

That’s all for today’s episode.

Thanks again to Earnix for sponsoring today’s episode of The Road Map. If you are struggling with pricing decision solutions, check out LendingPlus—Earnix’s new platform that combines pricing analytics and credit decisioning to give auto lenders a full view of performance without relying on IT.

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We’ll see you online—and here—next time.