‘Afraid’ buyers are rushing to purchase cars ahead of tariffs

WHIPPANY, New Jersey — President Trump’s auto tariffs have customers and dealers spooked.

At the Lexus of Route 10 dealer in the New Jersey suburbs, the showroom floor was buzzing more than normal for a weekday at the end of the month ahead of the 25% tariffs on foreign cars that are poised to take effect on April 2.

“Well, we’re seeing people come in; they want to buy cars because they’re afraid,” said Tom Maoli, the owner of Celebrity Motor Car Company, which runs Lexus of Route 10 as well as BMW, Ford, and Mercedes dealerships and a few others. “The average car in the United States of America now sells for $40,000, so you’re talking about a $10,000 increase. … They’re buying. They want to buy. Now.”

The smooth-talking and sharply dressed dealer claims the average auto payment will go up by a whopping $300 per month.

Read more: What Trump’s tariffs mean for the economy and your wallet

Maoli told Yahoo Finance that the total MSRP of a car doesn’t matter to buyers — it’s all about the monthly payment. With the average monthly payment for a new car hitting $754 a month last quarter, adding $300 puts these owners over the $1,000/month barrier.

Maoli said he and other dealers have few options except to build up supply before the tariffs go into effect. Most dealers have around 50 to 100 days of new car supply, depending on the brand.

“Well, there’s not really much we can do right now,” Maoli said. “The only thing we can do is build up inventory, try and get inventory from the manufacturers as much as we can — whatever’s on the ground in the ports — and the same thing on the parts side because it’s going to affect repairs.”

Maoli told Yahoo Finance he’s currently “hoarding” auto parts for his service centers, anticipating waves of customers looking to repair their existing cars to keep them on the road.

“That same 25% tariff is going to affect repairs,” he said. “Repairs are going to go up. And, you know, if they’re not buying, consumers have to repair because they have to keep their cars on the road. You can’t stop transportation.”

Maoli said that the tariffs won’t just hurt foreign automakers like BMW (BMW.DE), Volkswagen (VOW.DE), and Lexus (owned by Toyota (TM)). Domestic automakers are feeling the pain, too, from their international assembly footprint and the complex auto supply chain for parts that spans the globe. Maoli noted domestic automaker stocks are also getting hurt, even Tesla.

Maoli, a Republican who worked on Trump’s first-term transition team, believes the president should be using a “carrot” instead of a “stick” to boost domestic production.