Used Car Supply May Rise Thanks to Trump Tariff

Update: Used Car Supply May Rise Thanks to Trump Tariff

Will used car supply rates keep up with the higher demand of increased used car sales?  The threat to new car import prices posed by the proposed Trump Tariff has fueled used car sales and promised to push them higher. Now it seems there may be another effect that could result from the tariff. As other nations that are home to major automakers meet to discuss their response to the proposed tariff, it appears that the export of used vehicles from the U.S. to other countries may suffer. However, this may not be entirely bad for the American used car market as a whole, so what might this mean for the BHPH industry in the U.S. Market?

Exporting used cars and classic cars is a huge business in the U.S. Relatively low overseas shipping and low import taxes, combined with the fact that U.S. drivers are more likely to lease vehicles than European drivers, have driven these sales over recent years. International buyers can choose from a wide used car supply, purchase a classic or used car online, and have it conveniently shipped from America. However, with other nations scrambling to respond to the Trump Tariff in what is being called the Trade War, it is possible that actions may be taken to curb these types of sales.

While this could certainly be devastating for businesses that rely upon export sales, it may have a very different effect on the BHPH market in general. To understand why one needs only to look at the numbers.  In 2017, the U.S. exported 35,000 classic cars and around 140,000 used cars. That is not a small number, but it pales in comparison to the 42.7 million used cars sold in the U.S. last year according to Experian.  It is, in fact, a relatively small portion of the whole used car supply in the U.S.

So what does all of this mean for BHPH dealerships? Do the math. The number of used cars exported by the U.S. last year is a tiny percentage of the number sold within the country– only about 0.3 percent– which is unlikely to be enough to damage the used car industry in the U.S. as a whole. What it may do, however, is increase available stock in some areas. After all, businesses that last year exported used cars to other countries are likely to find buyers within the U.S. if selling overseas becomes unprofitable. While 140,000 more vehicles is not enough to make a huge impact on the used car industry, and certainly not enough to flood the U.S. market, it will mean that BHPH dealerships may have a few more options when buying stock. With used car sales likely to keep rising, having a wider selection of quality used cars available on BHPH lots can only be a good thing. So, even if other countries do begin restricting used car imports from America, it is unlikely to prove anything but helpful to domestic BHPH sales.

Sources: Tire Review

Experian

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