We’re starting out with an administration that wants to see more vehicles manufactured, not just assembled, in the U.S. Production in the U.S. may mean higher costs with proposed tariffs on Mexico, China, and Canada, and those tend to make their way to the customer with a higher price point. We hope that interest rates and inflation decrease enough to offset that, but it will have some effect on the dealer, the OEM, and the consumer. Keeping supply in check may not be a bad thing for dealers, as long as it doesn’t cut into consumer affordability.
Dealers need to realize that EVs are going to continue to matter. The consumer pushback on EVs from insufficient infrastructure and a higher price point will subside as more charging stations come online, prices for EVs moderate, and tax credits unfold. Expect the demand that hybrids enjoy today to swing back to EVs at some point. Keep a close eye on product mix to stay in line with these trends.
Finally, dealers have to factor in the higher expenses we’ve already talked about, whether it’s interest rates, the cost of parts and labor, or the inflation pinch still felt by customers. All of it matters from the dealer’s perspective. Plan for how to manage these expenses, and how to help buyers navigate affordability issues as they deal with higher expenses.