As the U.S. auto industry reacts to new tariff discussions and global manufacturing uncertainty, dealers are entering uncharted territory. In today’s episode of Inside Automotive, NCM Associates Senior Advisor David Kain joins us to share his insight on how tariffs and political unpredictability are shaking showroom dynamics, consumer behavior, and dealer strategies.
First, Kain cautions that the current tariff situation creates unpredictability that many dealers are unprepared for, particularly after a strong March that may have temporarily obscured underlying issues. “Our clients are seeing a big slowdown in foot traffic,” Kain says, confirming that while sales in March surged due to early-quarter momentum and a looming tariff deadline, April has brought visible declines in showroom activity and consumer confidence.
Dealers are now forced to factor politics into their business strategy in a way they haven’t before. Kain explains that interest rates, chip shortages, and gasoline prices are tangible variables dealers have historically planned for. But political unpredictability—especially over international trade policies—is a more volatile and less manageable disruptor. “The art of diplomacy is not necessarily showing all your cards,” Kain says, urging a more calculated, behind-the-scenes approach to policy changes.
Some automakers, such as Mercedes-Benz, are holding back tariff-related price hikes, while others like Range Rover, have temporarily halted U.S. shipments altogether. Dealers, meanwhile, are sitting on a two- to three-month supply of vehicles, which is delaying the immediate sting of tariffs—but not for long. Kain emphasizes that consumers are already expressing hesitation, particularly in conversations about trade-ins, leasing, and long-term financing.
He also urges dealers to avoid overreacting by increasing prices above MSRP, a mistake some made during the COVID-era shortages. Instead, Kain advises aligning pricing strategy with OEM guidance and focusing on customer relationships, loyalty products, and service contracts. “Build for the long term,” he says, noting that transparency with customers is more important than short-term margin gains.
Kain also warns against the increasing trend of 84-month financing, which could trap customers in long-term negative equity. “We used to bring the customer back with equity in two years,” he says, referencing his family’s Ford dealership experience. Extended financing risks driving consumers away from dealerships permanently once they realize they’re financially stuck.
Finally, Kain advises dealers to communicate clearly and frequently with their teams, noting that staff members are just as affected by media coverage and uncertainty as leadership. Anxiety among sales professionals is rising, and dealership leaders must proactively address it to maintain morale and productivity.
"I think what's really particularly challenging is dealers having to now account for the unpredictability of politics." – David Kain
