Tariffs, Tight Margins & Tough Choices—Is Your Dealership Ready?

Real Talk: How U.S. Tariffs Could Shake Up Canadian Dealerships.

The auto industry is no stranger to change, but this one? It’s a big deal.

A 25% tariff on Canadian auto imports is on the table, and if it goes through, it’s going to hit dealerships hard—higher prices, shifting inventory demand, and a whole lot of uncertainty. But here’s the thing: this isn’t the first time the industry has faced a challenge, and it won’t be the last.

So, let’s talk about what this means for your dealership and, more importantly, how you can stay ahead of the curve.

What’s the Deal with These Tariffs?

The U.S. is looking to boost domestic production by making Canadian-built vehicles more expensive to import. On paper, that might make sense for U.S. manufacturing, but in reality? It throws a wrench into an already complex North American supply chain.

Canadian dealers—especially those selling new vehicles assembled here—will feel it first. But even if you’re primarily focused on pre-owned, the ripple effects could still impact pricing, inventory availability, and consumer behavior.

What This Means for Your Dealership

• Margins Are About to Get Tighter If these tariffs go through, it’s going to cost more to get vehicles into the U.S., which means higher prices for buyers and tighter profit margins for dealers. Absorbing the extra cost? Not a long-term solution.
• Shifts in Inventory Demand Buyers may start looking for lower-cost alternatives, which could drive up demand for used cars and pre-owned models that aren’t affected by the tariffs. If you’re not already leaning into certified pre-owned, now’s the time to start.
• Financing Will Be More Important Than Ever Higher prices mean more customers relying on financing solutions to make deals work. This could be an opportunity to strengthen relationships with lenders and ensure you’re offering the most competitive options.
• Consumer Hesitation is Real Big-ticket purchases come with big decisions—especially when economic uncertainty is in the air. Some buyers will rush to buy before prices rise, while others will wait to see how things shake out. Clear messaging and strong customer education will be key to keeping people engaged.
• Automakers Are Already Making Moves Companies like General Motors are adjusting their production strategies to offset potential tariff impacts. Some brands might shift more assembly to the U.S., while others may absorb short-term costs to stay competitive. Either way, staying informed on your OEM’s strategy is critical.

So, What Can You Do?

Let’s be real—dealerships that stay ahead of the game will come out stronger. Here’s how you can prep now:

• Refine Your Pricing Strategy – Get ahead of potential price increases and be transparent with customers about why costs are shifting.
• Double Down on Used Inventory – If demand for pre-owned spikes, be ready to meet it with the right vehicles and financing options.
• Get Smart About Financing – The easier you make financing, the more deals you’ll close in a high-cost market. Work with your lenders to stay competitive.
• Invest in Your Team – If turnover is high and hiring is a struggle, now is not the time to lose good people. A strong team will be your biggest asset through market shifts.
• Keep the Conversation Going – The more education and transparency you provide customers, the more trust you’ll build. Proactively address concerns, explain financing, and highlight value in every deal.

What’s Next?

This industry is built on resilience. We’ve seen challenges before, and we’ll see them again—but the dealerships that plan ahead and adapt quickly are the ones that thrive.

• Want to learn more about how to protect your bottom line in times of uncertainty?

Download our free white paper: "Navigating Shrinking Margins: HR Strategies for Dealership Success." It’s packed with insights on optimizing costs, increasing retention, and driving profitability in 2025.

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This is the conversation dealerships need to be having. How is your team preparing for market changes? Let’s talk.

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