How New Tarrifs Are Rewriting the Auto Playbook — And How Smart Dealers Can Win Anyway

In an already challenging auto market, another shockwave is looming: 25% tariffs on imported vehicles and auto parts. For both dealerships and consumers, this isn’t about global trade or geopolitics. It’s about real dollars, rising costs, and a market dynamic that’s shifting fast.

What’s at Stake

These tariffs target vehicles and auto parts manufactured outside the U.S., meaning virtually every corner of the industry will feel the impact. The most immediate hit will be new vehicles. Imports will get more expensive overnight, and even domestically assembled models won’t be spared, since many rely heavily on globally sourced components.

The used car market won’t escape either. As new vehicle prices rise, demand for used cars will surge, driving values higher across the board. Whether customers are shopping new or used, sticker shock is coming.

And it doesn’t stop there. Most service departments depend to some degree on imported parts for repairs and maintenance. As tariffs take hold, even routine service visits — which have already seen steady year-over-year price increases — will take a bigger bite out of customers’ budgets long after they drive off the lot.

The Dealer Dilemma

Dealerships are no strangers to macroeconomic headwinds (COVID, 2008, etc.), but the challenges ahead require a different approach.

Some are already moving quickly to offload inventory and reorder before price hikes fully take effect. It’s a smart short-term tactic, but as pricing stabilizes and the market absorbs the impact (early forecasts suggest new car prices could jump by $5,000 to $10,000), drivers will almost certainly hold onto their vehicles longer or shift their attention to the used market.

At first glance, this might seem like a net positive for dealerships. Moving inventory now keeps lots clear, and aging vehicles typically mean more opportunities for service revenue. But it’s not all sunshine and calendars full of appointments. Older vehicles bring more breakdowns, and when parts get more expensive (and potentially harder to source), customers will face longer wait times, bigger repair bills, and mounting frustration. Service bays may stay full, but rising costs and softening new vehicle sales will eventually work together to compress margins.

So the question becomes: How do dealerships protect and grow revenue when both the sales floor and service lane are under pressure?

Fixed Ops Are the Anchor

The good news is they already know the answer. Fixed operations — service, parts, and protection products — have always been a key part of the puzzle. In tomorrow’s market, they’ll matter more than ever. Customers will be looking for ways to manage rising ownership costs and guard against macroeconomic uncertainty. Dealerships that lead with these protections won’t just safeguard margins, they’ll build deeper, longer-lasting customer relationships.

One of the most effective ways to do that is through Vehicle Service Contracts (VSCs). These plans let consumers lock in repair costs, turning unpredictable, budget-busting bills into affordable, predictable payments. And they don’t just benefit drivers. They also act as a force multiplier for the dealership, creating recurring revenue, driving service center velocity, and improving customer retention well beyond the initial sale.

The Bottom Line

The proposed tariffs are just the latest reminder that the auto industry is shifting fast. Dealers who continue leaning solely on sales-first strategies will feel the pinch. But those who lean into service, protection, and long-term customer value as essential components of profitability will be positioned to win.

How Parabolic Auto Can Help

For many dealerships, adding new services or programs is costly and time-intensive. On top of that, customers today aren’t exactly eager to tack on an extra $3,000 or $4,000 for a VSC — especially after the initial sale. That’s where Parabolic Auto comes in.

We don’t ask our partners to reimagine or reinvent anything they’re already doing. Our purpose-built platform plugs seamlessly into your existing infrastructure and takes your core VSC offering to the next level. We convert it into a flexible, month-to-month protection plan made available to eligible customers after the initial point of sale — no need to change how you sell, retrain staff, or overhaul marketing strategies.

Simply put, we help you make the most of what’s already working and make it even more profitable. Our dealership partners unlock a new, dependable stream of incremental revenue without disrupting their workflows, while customers get affordable, transparent coverage that meets today and tomorrow’s market realities. And getting started is completely free.

All you have to do is turn us on — and we’ll help you increase your VSC penetration by up to 20%.