President Trump’s trade war is scrambling markets, including the automobile industry. People are rushing out to buy cars before price hikes from Trump’s tariffs kick in. New vehicle registrations in Colorado jumped more than 10 percent from January through March compared to the same time last year, according to the Colorado Automobile Dealers Association.
But what happens next? As the Colorado Auto Show gets underway in Denver, CPR’s Ryan Warner spoke with Matthew Groves, the head of the Colorado Automobile Dealers Association, about what shoppers should know when they head to the lot.
This interview has been edited for length and clarity
Ryan Warner: drive a 10-year-old car, no car payment, and my reaction to these tariffs is to keep my car longer and save money at a volatile time. Let's say I meet you on a showroom floor. What do you say to me right now?
Matthew Groves: There've been two trains of thought. Some people took your approach and some said, “Let me get that car before April 2nd.” And so the last week of March was a really, really good week for moving cars. So much so that we almost struggled in parts to find dealers that had inventory, to put cars on the show floor this weekend, that's a good problem to have. But I think in terms of how people are reacting to the tariffs, the dealers are there to help you find something that works for you. So this is a time where I wouldn't necessarily put off buying a car. If you have a transportation need, it's time when I might say don't try to do it on your own, because not only are we battling tariffs, we've still got very high interest rates, we've still got some low inventories, things can be hard to find, so having a network of dealers out there either across brands or one with multiple dealerships in the same brands, they're going to be able to help you find the car and the financing terms that are going to work for you.
Warner: “Car and Driver” compiled a list of how every brand is responding to tariffs, and there are some brands that are just saying, “We'll absorb it so that the customer doesn't.” Not everyone is saying that, but beyond a list like that, if a consumer wants a deal least burdened by tariffs, what questions should they ask?
Groves: There's no such thing as a truly domestic or truly international car anymore. The supply chains are so globalized that there's going to be a mix. So when we say “tariff,” it's not going to be a zero or 25 percent dichotomy. There's going to be somewhere in the middle on the parts that are from overseas, the manufacturing processes that are overseas. So it's going to be not only different by manufacturer, but different by model. So, Ford, for instance, the F-150 is built somewhere different than the Mach-E, and that's just because the manufacturing, the assembly line, is built for that particular model.
Warner: So this is indeed tough to navigate. It's why you suggest having a navigator with you. This notion, that you say, “I drive a German car, I drive an American car, I drive a Japanese car,” is shorthand for a much more complicated process.
Groves: Absolutely, and the more and more technological and electrified these cars become, we just sort of proliferate the number of places that are providing components for it.
Warner: I read a column in the trade publication “Inside EVs” and the headline was, “What is the future of the dealership model?” Let me just quote from this: “Times are changing, and folks are gravitating towards the contactless buying method that lets them simply hop on an app, buy a car, and take delivery.” I hear you saying you need a navigator, and yet there are models under which the dealer goes the way of the dodo. Will you speak to that tension for me?
Groves: There's two things I think are important. One is people are used to the Amazon model, where it just comes to your door, but people are also used to the Amazon model, where if you don't like it, you send it back. That's a little bit harder with a car. And what our numbers have shown us – we collect auto outlook data from both the state registrations and from national sales data – what we've shown, especially when it comes to EVs, is that franchise dealers’ sales are up 110 percent this quarter while direct-to-consumer sales are down 10 percent. Now, some of that is, there's some animosity against Tesla right now, but largely there are so many more models and so much more variation in what you can do on the dealer side that people are gravitating to the flexibility and to the availability as rather than the convenience of just ordering online and waiting six to eight months until it's ready and then just having it dropped off at your door.
Warner: I think I understand from your answer there. Tesla was a direct-to-consumer product.
Groves: Yes. Tesla, Rivian and Lucid are the three direct-to-consumer dealers. They don't have dealerships, so when you place an order, it comes from wherever they manufacture right to you as opposed to you going to a lot and picking the one that has all the features or colors that you want and taking that one home.
Warner: Indeed, in anticipation of the tariffs, Coloradans bought like crazy. Early in the year, new vehicle registrations were up 10 percent from the same period in 2024. And usually this is a slower time, braving the elements. The car show itself is not a place where a transaction occurs, where you drive away with a car. But no doubt these conversations will come up. And what do they sound like?
Groves: Oh, absolutely. The folks that we have on the floor are products spokespeople. They can tell you everything about the car, but when you want to start talking sales, we do have to refer you back to a dealership. And so this is not a selling show, and it almost works better that way. Nobody wants to be driving a car right off the show floor. You want to have the ability to test drive it, to look at the financing, make sure that works for you, make sure you can get approved for financing. It's a complicated process.
Warner: What is something cool? Let's have some fun after all the serious tariff talk. What is something cool on the floor that has wowed you?
Groves: What's been great for me is the brands vary every year. Some people are always in, some people are sometimes in. We've got Cadillac back this year, for the first time in three years. And the reputation generally is that it's an older brand, but I'll tell you, they have an all EV lineup this year and the Escalade IQ my daughter saw for the first time, and you get in the backseat and the chairs are massager chairs, each chair has its own individual entertainment station, there's a very complex digital control for the air conditioning from the backseat, it is probably the best passenger princess experience you can possibly get in a car right now.
Warner: Passenger Princess Experience. PPE.
Groves: That's what we call my daughter, princess.
Warner: Here I am with my 10-year-old car thinking my newfangled heated seats are special, but they certainly don't have massagers. What is the scene for used cars? We've focused largely on what is sparkling and new, what are the effects of the long tail of the pandemic and the chip shortage and tariffs and all of this on the used car market?
Groves: “You know what I would say about the used car market is it doesn't respond to the news of the day, right? It's pretty tightly correlated with the new car market, but it's about 30 days behind. So in the instance of tariffs, they will drive prices up to some degree. And so as prices go up on new, demand shifts to used, 30 days later, prices go up on used.
Warner: That's interesting. A month gap.
Groves: And that might just be how we see it in the numbers because the numbers are reported monthly, but I mean, it is customers reacting to the market. And the most important single factor you can find in a car right now is how much does it cost. Features are great, convenience is great. Gas mileage is great, but it always comes down to how much do I have to pay for it?
Warner: It always comes down to that, but is that more accented right now?
Groves: It is. What we've been seeing over the past year is that people are not giving up on cars even as they got shorter supplies and more expensive because of interest rates, people didn't stop buying. They're just digging deeper into their pocket to get the cars. And so the challenge for this industry is how do we keep cars as affordable as possible? And that's why you're hearing some of the manufacturers say, “Hey, we're just going to eat the tariffs for as long as we can,” or “We're going to try to mitigate the damage by spreading it out over all of our models.”
Warner: Can we say then anything about the used car market yet? Or are we still waiting on the data to catch up?
Groves: I think we're still waiting on it, but this trend has been pretty consistent over the past five years. So we expect either people to stay in their cars a little bit longer, or when they come to the dealer's lots, they're going to say, “Hey, do you have anything in the certified pre-owned or low mileage, used, maybe something coming off a lease, those kind of cars get very popular in harder economic times.”
Warner: Trucks and SUVs are really popular here, given Colorado's weather and topography. Roughly two-thirds of vehicles on our roads are trucks and SUVs. You’ve, in fact, rebranded the Denver Auto Show to the Colorado Auto Show with a greater focus on vehicles that might get you across more than just asphalt. Do you think that this environment might shift people away from what are usually more expensive SUVs to something more slimmed down?
Groves: I don't. If you throw in the crossover SUV, that category, light trucks and SUVs actually comprise 85 percent of all sales in Colorado.
Warner: So that’s like the RAV4 or something.
Groves: And it would also include Subarus, which are very popular here, not your typical SUV, but they have that longer frame. They handle weather a little bit better. Maybe I'm speculating a little bit here, but when financial times get tough, you need the escape. And for Colorado, the outdoors is the escape. I don't think we're going to see a time where people are ever willing to give that up.
Warner: Is this a hard time to be you? I mean, would you have preferred to open the auto show without the conversation around tariffs?
Groves: Would it make life easier for me individually? Sure. But the purpose of the show is to connect buyers with dealers and help consumers navigate the difficult times. So I think it's a very important time for the show to be running because it's where we can provide the best public service.
| This story is part of a collection tracking the impacts of President Donald Trump’s second administration on the lives of everyday Coloradans. Since taking office, Trump has overhauled nearly every aspect of the federal government; journalists from CPR News, KRCC and Denverite are staying on top of what that means for you. Read more here. |
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