Preparing for the Storm: Understanding Tariff Turbulence in the Collision Industry
by Alana Quartuccio
There is so much our industry doesn’t know about tariffs. How will they affect our industry? What can we expect to happen, and when can we expect it?
While things appear to be relatively calm before the potential storm hits, Ryan Mandell (Mitchell International) set out to provide insight into what role world tariffs may play in the collision repair world via a webinar hosted by the Collision Industry Electronic Commerce Association (CIECA) in mid-April.
“This is a very volatile and important subject as it has the potential to cause a disturbance in our world,” outlined Mandell, who stressed that there has been a lot of change happening since the current administration began to enforce these policies.
Because “there are a lot of moving parts, some of it is open to interpretation, so what you’re seeing today is our interpretation of the research that we’ve done on the specific topic with a heavy reliance on Mitchell data to help understand the quantifiable aspects that we can understand and look for moving forward,” he explained.
The tariffs apply to whole vehicles that are being imported to the United States. As of April 3, there is a 25 percent tariff on whole assembled vehicles being imported into the US. It was expected that a 25 percent tariff would commence on May 3 for imported auto parts that are not necessarily a component of a whole assembled vehicle.
Mandell noted that these tariffs only apply to areas outside of the United States-Mexico-Canada Agreement (USMCA), which remains intact. However, he advised to keep in mind that change has been dramatic – just in the 30 days leading up to this discussion alone – and more change may come into play over a 90-day period, according to the US Department of Commerce.
Not a single manufacturer is spared from tariffs; however, the equation “is not that simple,” according to Mandell. He explained one can’t just look at one manufacturer overall – “you have to look at each individual model to see where there’s more exposure to foreign manufacturing to see where there’s more exposure.”
How tariffs affect vehicle manufacturing is going to be vehicle specific. For example, Honda CRV manufacturing involves 20 percent coming from Japan and assembled in the US, while a Toyota 4 Runner is 100 percent manufactured in Japan and assembled in the US.
Ninety percent of the 2025 Hyundai Elantra comes from Korea as well as its final assembly, “so we can assume that the entire vehicle will be subjected to a 25 percent tariff.”
Prior to the implementation of these tariffs, it was believed that “domestic brands were going to look into expanding manufacturing into mainland China.” However, Mandell believes that may no longer be the case as a result.
There are many unknowns on how this could affect the consumer as it may be assumed that the tariff costs will be passed on to them; however, “there are strategies OEMs and dealers have at their disposal to potentially adjust some of these values and limit exposure to the end consumer.”
Cost increases of new vehicles is likely to result in a higher demand for used vehicles, Mandell predicted. As was seen during the pandemic, a reduced supply of new vehicles may result in a five to 10 percent increase in used vehicle prices as a result. A lot of manufacturers are also planning to “produce fewer vehicles for importation into the US, so as that happens, it’s just simple supply and demand. As the supply weakens, the demand will increase, creating a situation where you see used vehicle prices increase.”
Consumers have been trying to avoid paying more by making new vehicle purchases this spring. “Cox Automotive reported the average days of supply for new vehicles dropped from 91 days in March to 70 days in April. Consumers are essentially looking at this as getting the vehicle at a discount before they go up in price.”
How could this affect total market loss values? “We can expect a bit of a lag,” Mandell reported. “Most insurance carriers are looking at historical data between 30 and 90 days to be able to get comparable vehicles they can base the total loss market value on. It takes some time for that to show up in the data. Total loss market values have been flattening for the last several months, so we would expect more of a flattening trend to take place into the summer. And as we get closer to the middle of the summer, we’ll probably actually start seeing the effects of these tariffs if they do indeed play out.”
It’s expected that vehicle owners are likely “to spend more money on maintaining their vehicle rather than replacing it.” Mandell suggests that one can easily make the case that consumers are feeling financially strapped due to tariffs being imposed on many industries affecting their daily lives which could make them delay new vehicle purchases, especially with the uncertainty of not knowing how long these tariffs may potentially be in place.
How will parts be affected? “It depends on the part. You can’t assume that there will be a price increase across the board,” according to Mandell. In addition, a reliance on replacement parts is also expected. He also pointed out that “it appears that sheet metal components – like hoods, doors, fenders and things of that nature – will not be incurring additional tariffs at this time.”
It’s also believed that there will be a reduction in overall total loss frequency between roughly one to three percentage points due to various factors. “New vehicle price increases will trickle down to used vehicle prices. The cost of repair will also go up but not to the same degree, but you will see an increase in salvage vehicles due to increased activity for the rebuilder market and an increased demand for recycled parts.”
Mandell noted that the USMCA still applies to items manufactured in Canada or Mexico. However, items like sensor cameras involved in ADAS components, for example, could fall into the tariff category if the manufacturer uses diverse materials from different parts of the world. “So, even if a part is manufactured domestically or within the USMCA, there could potentially be some exposure to additional tariffs because of the raw materials used.”
As the industry saw with the pandemic, there is so much unknown about what could happen and when, especially as various unknown variables could potentially change outcomes. At the time of Mandell’s webinar, the parts tariffs had not yet gone into place, and “knowing that, there is inventory onshore we can assume that will get worked through first.”
Mandell also spoke to what can be expected for consumers and their automobile insurance. “It really comes down to if they see increases in their premiums,” he foresees. “Insurers are looking at mitigation strategies, and it appears that tariffs may be around for a significant amount of time, so they may be looking to increase rates across the board. Typically, that requires a 12-18 month regulatory approval process, so that may be a little more of a midterm effect later down the road. But as premiums increase, you can expect to see consumers make different decisions about their auto policies. Over the past couple of years, as premiums have increased, we have seen fewer claims be filed for smaller hits. Either consumers have dropped coverages from their policy to increase their affordability or they’ve raised their deductible, and it just doesn’t make financial sense for them to go through with a minor damage claim.”
Want more? Check out the June 2025 issue of New England Automotive Report!