Used Motor Vehicle Parts Wholesalers NAICS 423140

May 13, 2025 - Auto Parts Tariffs Eased

• 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.
• 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.

• With the Trump administration threatening 25% tariffs on goods imported from Canada and Mexico, the automotive market anticipates significant disruption and price hikes in 2025 as a result. 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, which encourages consumers to keep their current autos longer. That bodes well for the used car parts and repair industries, but even they will have to deal with price increases given that many car parts are imported.
• Economic activity in the services sector including the wholesale sector expanded in October 2024, according to the Services ISM Report on Business. The Services PMI registered 56% in October, up 1.1 percentage points from September, marking the fourth consecutive month of expansion. Fourteen of the 18 services industries reported growth in October including Retail Trade; Information; Transportation & Warehousing; Accommodation & Food Services; Finance & Insurance; Construction; Mining; Public Administration; Utilities; Real Estate, Rental & Leasing; Educational Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Wholesale Trade. Fifteen of the 18 services industries reported an increase in prices paid for materials and services during the month of October, including the Retail Trade and Wholesale Trade industries. Sales for motor vehicles and parts wholesalers rose 10.9% in July 2024 compared to a year ago and were up 0.5% from the previous month, according to the US Census Bureau. Inventories for motor vehicles and parts wholesalers were up 11.9% in July 2024 compared to a year ago and increased 0.9% from the previous month.