Experts Say Tariffs Could Make Dealers 'Suffer Significantly'

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July 11, 2018—A 25 percent tariff on imported vehicles would likely chill new-car sales and devastate dealership profits, according to multiple industry experts noted in a recent article.

“Dealers heavily weighted toward imports … will suffer significantly,” Moody’s Investors Service vice president Bruce Clark wrote in a research note. “These companies have minimal U.S.-produced vehicle penetration to offset reduced sales from price increases on imported vehicles.”

Among publicly held retailers, Penske Automotive Group, given its large presence in Europe, and Lithia Motors, which has a high percentage of domestic-brand vehicle sales, would suffer least, Clark said.

Viewing things on a large scale, though, LMC Automotive recently forecast that up to 2 million new-vehicle sales would be lost if the aforementioned tariff goes into effect.

Dealer trade associations are among those issuing written statements for an investigation of the matter. Association representatives would like to testify at public hearings scheduled for July 19-20. And, in comments submitted to the Commerce Department, Jaguar Land Rover officials said tariffs would greatly reduce more than $1.3 billion that its dealers plan to spend during the next five years on facility upgrades.

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