Auto Parts Manufacturers NAICS 3363

May 6, 2025 - Auto Parts Tariffs Modified

• After the Trump administration’s 25% tariff on imported auto parts went into effect in late April, the government altered the levies to soften price shock and give the industry more time to adjust. The new auto part tariffs offer a partial reimbursement to manufacturers during the next two years if the final assembly of an automobile is in the US, regardless of the parts’ origin. The rebate will be 3.5% relative to the sales price for domestically assembled vehicles for the first year, and then fall to 2.5% for the second year. It also prevents secondary tariffs on other products, like aluminum and steel, from stacking up on an automaker. Despite this, automobile cost hikes will still be significant due to the tariffs, anywhere from $2,000 for the least impacted cars up to $15,000 for the most, according to an Anderson Economic Group analysis.
• The effects of tariffs on the automotive industry are beginning to be felt and the results will not be uniformly reflected across the industry, according to a survey by J.D. Power. The mix of foreign auto parts in a new vehicle are different across brands. Dealers will either have to absorb the costs or adjust their inventory away from foreign autos with tighter margins to brands with a strong US-based manufacturing footprint. J.D. Power expects to see price increases becoming readily apparent by the summer, with the average new car price by the end of 2025 estimated to increase by an average of 5%, or about $2,300. It also predicts new automotive retail sales will fall about 8%, or about 1.1 million units. J.D. Power expects the price volatility to stabilize by Q4 to a “new normal” with all the tariff-based sales adjustments.

• Struggling retailer Advanced Auto Parts is aggressively moving on a corporate restructuring in early 2025 to turn around years of floundering sales and ranking fourth among its competitors. Its closing of 700 corporate-owned and independent stores represents 10% of corporate locations and 20% of indies. It is also closing four distribution centers and simplifying its supply chain from big distribution hubs to smaller regional hubs in order to get the vast amount of parts the company must carry to customers as quickly as possible. With recession worries looming, auto parts retailers typically benefit from consumers putting off new car purchases in favor of repairing a current vehicle. But the ping-ponging tariff war between the US and its North American neighbors is a wild card that could increase costs and blunt any gain to be had in the auto parts industry.
• Employment by auto parts manufacturers fell 1.9% in November 2024 year over year while labor costs increased, according to the US Bureau of Labor Statistics (BLS). Average wages for nonsupervisory employees at auto parts manufacturers were up 12% in November 2024 year over year, reaching $30.07 per hour. The Producer Price Index for auto parts ticked up a slight 0.7% in December 2024 compared to a year ago. That number will skyrocket in 2025 if the Trump administration follows through on 25% tariffs on Mexican and Canadian imports. There is no such thing as an automobile fully made in the US. Virtually all cars contain parts from Mexico and Canada, and billions of dollars worth of auto merchandise crosses North American borders every year. Industry analysts expect tariffs to increase a car’s price by an average of $3,000.