With President Donald Trump’s new 25% tariff on imported vehicles and auto parts sparking widespread debate, many are questioning the potential fallout for the auto retail sector. On today’s episode of Inside Automotive, George Karolis, President of The Presidio Group, offers key insights into how dealers are reacting and what this could mean for mergers, acquisitions, and overall market momentum.
According to George Karolis, most dealers remain cautiously optimistic despite the uncertainty surrounding the newly announced tariffs. Karolis noted that March likely set a record month for most of them, referring to a Seasonally Adjusted Annual Rate (SAAR) of 17.8 million. He mentioned that this figure might represent the highest volume ever recorded for March. Retailers have boosted their confidence due to this strong performance, and many feel as if they have returned to the “good old days” of 2022. However, industry leaders recognize that they have yet to see the full impact of the tariffs.
Karolis pointed to a current two-month supply of unsold vehicles—about three million units—available on dealer lots. Interestingly, none of those units are affected by the tariff, which could provide a short-term buffer. He also emphasized that “supply-challenged environments” generally favor dealers, much like during the pandemic, and could help support continued profitability across both new and used segments.
In the M&A space, Karolis noted that activity remains stable, with over two dozen active engagements and multiple deals under contract. He said brand mix and geography are becoming increasingly important as tariffs may impact certain OEMs differently. Still, the industry is seeing a notable number of buyers emerge—some even calling daily to express interest in domestic brands like Chevy, Cadillac, or Stellantis stores, which tend to come at lower acquisition multiples.
There’s also a generational aspect at play. With the average dealer age hovering around 71, Karolis acknowledged that some owners are using the current wave of uncertainty—tariffs included—as a final nudge toward selling. “If it’s not tariffs today, it’s something else tomorrow,” he remarked, highlighting interest rate volatility and economic swings as recurring stressors.
On the flip side, some dealers are pumping the brakes on exits, waiting to see if the market swings in their favor. “I’m making more money than I ever have,” one dealer recently told him, underscoring how the evolving landscape could drive short-term profitability.
Karolis also addressed growing positivity around Stellantis, a brand previously under pressure but now seeing improved sentiment among its dealers. He credited renewed leadership and stabilized inventory flow as helping shift perceptions. He also pointed out that Mercedes-Benz recently announced it will absorb tariff costs, a strategic move likely to prompt other OEMs to support dealers and maintain consumer demand.
Finally, Karolis observed broad support among dealers for President Trump’s tariff strategy, stating that many see it as a move toward a more business-friendly and domestically focused-economy. “Manufacturing in the U.S. is a good thing,” he said, suggesting that the long-term goal of bringing production stateside resonates deeply with the industry.
"Dealers are feeling, I think, more stable than what the stock market is feeling right now… Dealers have been through a lot of ups and downs and weathered many storms." — George Karolis
