The cost of vehicles has risen in recent years, Tom Flory, the managing partner of Serra Auto Park in Green, said Wednesday. And tariffs enacted by President Donald Trump’s administration are going to continue to raise costs, not just for buying vehicles but also for maintaining them.
Flory, speaking to members of the Akron Press Club, said he expects tariffs on imported parts to affect prices. That includes replacement parts and those needed to perform maintenance, like filters.
“It has to be passed on somewhere,” he said.
Discussions around tariffs, which are taxes imposed on imports, have been ongoing for months as Trump has released a litany of sometimes-changing tax rates for goods from countries around the world.
His focus on tariffs as a way to bring manufacturing back to the U.S. has led a number of people who planned to make car and other major purchases in the coming year to move those purchases up by months, Flory said. He said business at his dealerships in March and April was outstanding, but it has since slowed.
“We took so many people out of the market at that time,” he said. “Why not take advantage of a better price or a perceived better price ahead of time?”
Companies are not going to ‘eat’ tariff costs
Flory said the true effect of rising tariffs on prices hasn’t hit yet. And that has him worried. He said the automotive industry has weathered tsunamis and recessions, but he’s concerned about tariffs. A lot of times, he said, what’s being said by the administration is being misperceived by consumers. They are the ones who will pay, Flory said.
“I know the world wants to think companies are going to eat that,” he said. “That’s not how it’s going to work.”
Costs for destination charges have risen, he said, while dealer incentives that can help reduce consumer prices have been reduced. Flory said the true impact of tariffs will continue to appear in rising prices. While the average vehicle transaction is between $48,000 and $49,000 currently, he said, he expects it to be more than $50,000 by the end of the year.
In part that’s because of tariffs, but it’s also because of strains to the supply chain that come with higher costs for component parts.
Because of those rising costs, Flory said he expects a reduction in charitable giving as people’s expenses go up. He also said he doesn’t think it’s realistic that the tariff efforts will result in production returning exclusively to the U.S.
Additionally, Flory said the effect on electric vehicles remains to be seen. That’s because of tariffs, but also because of other changes in the administration’s focus on gas vs. electric vehicles. Even if electric vehicles are no longer incentivized, he said, “someone eventually has to pay for all that investment” auto manufacturers made in the technology.
He said he expects car dealerships to consolidate or close in response to some of the challenges. He suggested the best thing consumers can do amid the uncertainty is stay positive.
“It is the unknown that scares us the most,” Flory said. “If we knew exactly what was going to happen, we’d get through it just fine.”
