Barry Freger, co-owner of Jeannette used car dealer Pinnacle Auto Sales, is scooping up as many late-model, low-mileage vehicles as possible.
With a 25% U.S. tariff on auto imports set to begin April 3, Freger hopes to be ready when sticker shock, or a lack of available new models, sends consumers hunting for more used cars than ever before.
“There’s going to be a rush to the new car dealers, and when they’re out of inventory, we’re going to be ready,” he said.
And the anticipated jump in new auto prices isn’t a matter of if, but when, area dealers say.
The tariff, through which the White House expects to raise $100 billion in revenue annually, could be complicated as even U.S. automakers source their components from around the world.
“Everybody is talking about it,” said Nate Rowan, general manager of Crivelli Chevrolet Buick in Mt. Pleasant, of the tariff and the predicted spike in car prices. “I tend to deal in specific things that I can control, and I can’t control this. I don’t know what it’s going to do with the (auto) market.”
The White House claims the tariff will foster domestic manufacturing but also could put a financial squeeze on automakers that depend on global supply chains.
Whatever effect the tariff has on prices, Rowan said, “We’re not going to see it until further down the road.”
Industry observers expect prices for new cars to increase when the proposed tariff on auto imports takes effect — jumping by anywhere from $4,000 to $12,000 per vehicle, according to a recent study from Anderson Economic Group.
Rowan said it can take anywhere from six weeks to three months for an ordered car to arrive from the manufacturer.
“It’s going to increase all the costs for everybody,” said Doug Graft, owner of Graft Sales and Service, a Scottdale used car business. “It’s a trickle-down effect.”
Pinnacle has been keeping an inventory of about 40 cars on its lot, but Freger plans to increase that to about 65 vehicles.
He estimated it might be two months before the tariff has a local impact.
When it does, he said, Pinnacle may have to accept a bite out of its profit margin in order to remain competitive.
“With so many cars available on the internet, ours have got to be priced right,” he said.
David Carey of Harrison browsed the lot at Cochran Chrysler Dodge Jeep Ram Allegheny Valley on Thursday. He said he won’t be in the market for a foreign car, not because of the impending tariffs but because of their long-term ripple effect.
“The prices are going to suffer, but so is the supply chain,” he said. “You don’t know what … will come next, and that will impact manufacturing across the globe. Every time you need a part, you don’t know how much it’s gonna cost.”
While he’s not sure about the tariff’s impact, manager Joe Gonos said many customers have already been searching for lower-cost vehicles at Latrobe Auto Group, which sells Chevrolet and Ford models in Unity. He said models priced under $30,000 are “selling like crazy.”
Preowned vehicles also are in demand.
“We’re selling two used (vehicles) to every one new,” he said.
Gonos said sales are up compared with the same time last year, but profits aren’t keeping pace.
“The profit margin is going down a little bit,” he said. “When you’re trying to be competitive, you have to be pretty aggressive on your prices.”
Gonos estimated the dealership’s stock of vehicles is down by at least 25% from its normal inventory.
“It’s hard to keep them on the lot,” he said. “We’ve been selling them pretty quickly. It’s hard getting the factory to get them here as quickly as they used to.”
Bob Bordonaro Jr., whose family owns Hillcrest Volkswagen in Lower Burrell, said his business has seen a spike this month.
But he doesn’t believe it’s tariff-related, since information on the import tax was just recently announced.
“We’ve been extremely busy,” Bordonaro said. “The weather has been in our favor for this time of year.”
Mike Petrillo, owner of North Greengate Auto Sales in Hempfield, also has faced inventory challenges.
“I can’t get enough vehicles,” he said. “I have to pay more for nicer cars.”
Petrillo said he sometimes buys a used car from a new vehicle dealership, but he mostly relies on customers wanting to sell their vehicles to build up his inventory.
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Petrillo, who has operated his business for nearly 50 years, said he thinks tariffs on foreign automobiles won’t cause as much of a problem as some people anticipate.
“I think it will benefit us down the road,” he said.
The National Automobile Dealers Association and American Truck Dealers said in a statement they support modernizing the country’s trade agreements and moving toward freer and fairer trade, but added that “steep new tariffs would hurt the auto and truck retail industries and consumers.”
Impact on parts
An additional tariff has been announced for imported car parts, with less definite timing for enforcement.
No vehicle is built or assembled with 100% domestically made parts, so any new tariffs would harm all dealerships by increasing vehicle prices, lowering demand for new vehicles and resulting in a loss of jobs, NADA said.
With the tariff in place and costs on the rise, “Our immediate inventory might be worth a little bit more,” said Ron Sidehamer, manager of Toll Gate Auto Parts in Greensburg. The business sells some new car parts but mostly deals in recycled parts from used or salvaged vehicles.
“Going out further, it will just drive up the cost of the raw materials used in the cars we buy for parts,” he said, adding: “It’s a little early and hard to predict yet. (The tariff) probably will have an effect down the road if it stays on for long.”
“I think, parts-wise, (tariffs) probably will have the biggest impact,” said Will Redinger, one of the co-owners of Randy Redinger & Sons Auto Service, a repair shop and used car dealership in Unity.
Redinger compared the looming tariffs to the covid-19 pandemic, when getting supplies was sometimes the biggest problem.
He said his family’s shop has seen an increase in its repair business.
“We have noticed more people are fixing their cars,” he said, with the tariffs pending and higher interest rates adding to the price of a new car loan.
Regis Kurela of East Way Auto Parts in Unity suggested some electronic car parts could be affected by the tariff, but he’s not concerned about the overall cost or supply of parts.
“I think the pricing will balance within the next four to six months,” he said. “We still make a lot in this country. Our warehouses always have a good inventory to get by for six to eight months.”
“I actually think (the tariffs) will benefit everyone,” Kurela said.