Hampton Roads car dealers face many unknowns about where the road will lead as the effects from industry tariffs loom.
On April 3, the Trump administration enacted a 25% tariff on automobiles shipped to the U.S. from other countries. Another 25% tax on key imported car parts is expected to take effect by May 3, but Trump’s executive order on April 29 modified that tariff to reduce costs for automakers who assemble in the U.S. over the next two years. The auto industry, including suppliers, is also facing 25% levies on steel and aluminum. Car imports compliant with the United States-Mexico-Canada Agreement are exempt from the tax except for their non-U.S. content. An April 29 executive order also prevented tariffs from stacking so carmakers who pay the 25% auto import tax won’t be subject to other levies.
The Budget Lab at Yale University, as of April 15, expected the tariffs to increase prices of vehicles by an estimated 12% in the short run and 15% in the long run, with the price of an average new car rising by $7,400. Prices of used cars, according to an iSeeCars study, could increase by up to nearly $3,000.
Hampton Roads residents are concerned about how federal actions will affect auto sales and the local economy. Talks of a potential pause on the auto import taxes along with possible manufacturer exemptions has led to confusion on how costs will shake out.
Ed White, co-owner of Starr Motors in Suffolk, said uncertainty surrounding the tariffs has led to uncertainty among sales and service staff and customers.
“They don’t know when to buy, not to buy — whether they’re doing the smart thing now or later,” he said.
In the meantime, the dealership has an employee pricing and a Starr Family VIP discount in place to get ahead of the tariffs. The family-owned business, founded in 1962, specializes in new and used Chrysler, Dodge, Jeep and Ram vehicles. White said he feels fortunate the majority of the vehicles he sells are built in the U.S., including the Jeep Cherokee.
“We sell more of those than probably anything else here,” he said.
Dan Banister, owner of Banister Automotive, also has an employee pricing sale — prompted by manufacturers on pre-tariff vehicles — at his five dealerships that include two Nissan locations in Chesapeake and Norfolk; Chrysler, Dodge, Jeep, Ram in Hampton; Mitsubishi in Hampton; and Ford in Maryland.
“So, it’s actually a pretty good time right now to purchase a car in anticipation of something happening or not happening,” he said.
In the industry since 1992, Banister started as a salesman and took over ownership of the first of his stores in 2017. He is also the current chair of the Virginia Automobile Dealers Association.
Seeing the tariffs “as more of a bargaining chip than a long-term strategy,” Banister said if the tariff war is short-lived, the industry can adapt. But, if it is long-term, then there will be some issues as the cost of goods — vehicles, parts and insurance — will increase and be passed on to consumers.
Banister said it would be difficult for the average car dealership to eat the costs as they already operate on slim profit margins. According to the Center for Automotive Research, the auto tariffs on foreign imports will increase U.S. automakers’ costs by an estimated $108 billion this year.
“A lot of small businesses, as I am, are fighting every day just to stay profitable with today’s climate,” he said. “It’s a little bit different time than it’s been in the past, but we always figure out a way to navigate the waters and make things work.”
While tariffs are a headwind Banister and auto dealers prefer not to have, he said he thinks they could really help the economy and the average worker in the long run to return manufacturing to the U.S.
“Right now, we’re bullish about the future of the automotive industry, but again, if these tariffs do happen, it will significantly impact us,” he said.
And when it comes to tariffs on imported car parts, small-business owners such as Dervin Brown with Rebel Auto Repair & Towing in Newport News are especially concerned. Brown, in business for four years, works solo and specializes in repairing high-end European import brands such as Maserati, Mercedes, BMW, Lamborghini and Bentley.
“The (increased) price for parts has not yet reached me, but I can assure you, it’s crazy and it will affect me on a day-to-day basis,” Brown said, noting he will have to pass it on to his customers.
Don Hall, president and CEO of Virginia Automobile Dealers Association, said in a message on the association’s website that the industry is bracing for a shakeup, but dealers will get through this period just as they have before during difficult times.
“Since the dawn of the franchise system a century ago, auto dealers have been through thick and thin, recessions and depressions, and periods of overwhelming uncertainty,” he said.
The tariffs come at a time when dealer profits have eroded from a 2021 peak, when transaction prices and monthly payments are near record and the percentage of customers with negative equity is rising, he said.
“It’s not easy to buy a car, and it’s going to get even harder to sell them,” Hall said.
Several Hampton Roads dealerships did not return phone calls for this story.
The Associated Press contributed to this story.
Sandra J. Pennecke, 757-652-5836, sandra.pennecke@pilotonline.com
Update: This story was updated on April 30 to include information on the executive orders signed April 29.
