Car dealers are walking a tight rope

Summary

Marketplace Morning Report – “Car dealers are walking a tight rope”

Date: September 1, 2025
Host: Nova Safo (in for David Brancaccio)
Feature Segment: BBC’s Monica Miller

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Episode Overview

This episode of Marketplace Morning Report analyzes how current economic challenges—most notably inflation, labor market shifts, and new tariff policies—are affecting U.S. car dealerships. The show interweaves fresh economic data with on-the-ground insights from car dealers grappling with price-sensitive customers, tighter margins, and uncertain incentives for electric vehicles.

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Key Discussion Points & Insights

1. The Federal Reserve’s Balancing Act

Segment starts at 01:03

• Main Issue: The Fed is caught between keeping inflation in check and supporting employment, especially as labor market numbers recently softened.
• Recent Data: July inflation (PCE index) held steady at 2.6%. Meanwhile, jobs reports have been revised downward for previous months, signaling possible slowing.
• Expert Perspective:
  • Larry Tantarelli notes the Fed is focusing more on labor market data due to signs of weakening.
  • The labor force is shrinking as baby boomers retire and undocumented workers are deported, so slower job growth might not immediately signal rising unemployment.
  • Key worry: If job losses accelerate, the Fed may be forced to cut rates even as tariffs risk pushing inflation higher.

Notable Quotes:

• “It seems like their view is that the labor market is weakening and that is a bigger near term concern than the inflation issue.”
  – Larry Tantarelli, 02:00
• “There's a big difference between a slower pace of hiring and an increasing pace of firings. We're just not seeing the latter right now.”
  – Larry Tantarelli, 02:41

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2. Car Dealerships and the Tariff Tightrope

Feature segment begins at 03:58

Industry Landscape

• Tariff Impact: Dealers and automakers are ‘walking a tightrope’—absorbing extra costs from tariffs with little room for pricing increases due to razor-thin margins.
• Timing and Consumer Hesitancy: After a rush of purchasing in April (to beat tariff-related price hikes), sales have slowed. Customers are wary, delaying purchases or choosing used vehicles.
• Electric Vehicle (EV) Push: EV and hybrid interest is rising as consumers seek to take advantage of tax credits before they expire at the end of September.

Dealers’ Perspective

• Dealer’s View: Ellen Argula’s family business has seen wild swings—first, a tariff-driven surge, now a slowdown.
  • “I think consumers are concerned about pricing, how the tariffs will affect pricing on new cars. So they're delaying their purchases.... maybe cutting down on the number of cars in their household or buying pre owned.”
    – Ellen Argula, 04:49
• Uncertainty for Future Incentives and Technology:
  • Dealers like Argula hope for “fair resolution” over incentives for electric vehicles after significant investments in infrastructure and staff training.
  • “We are seeing that for sure. And it's hard to predict the future of EVs. We've invested a lot in the technology and we trained our employees. So we're hoping that there's some fair resolution in the future that includes EVs.”
    – Ellen Argula, 05:39

Industry Leaders’ Insights

• Costs Absorption is Unsustainable: Automakers, specifically Stellantis (Jeep, Chrysler, Dodge, Ram), report tariffs have already cost the company $1.7B this year. Mark Sheinberg, president of the Greater New York Automobile Dealers Association, says affordability is the core issue:
  • “It's about affordability. Everything's about affordability.”
    – Mark Sheinberg, 06:32
• Roller-Coaster Business: Sheinberg highlights constant challenges—tariffs, interest rates, gas prices—requiring nimbleness from dealers:
  • “It's got its ups and its downs. It's the bellwether of the economy in some respects.... dealers are always trying to piece it all together... lots of times beyond their control.”
    – Mark Sheinberg, 06:42
• Current Shaky Ground:
  • “So I think there's a feeling from consumers and from dealers that we're on very shaky ground again...”
    – Mark Sheinberg, 07:22

Consumer Voices

• Patriotism vs. Pragmatism:
  • Monica Miller interviews ‘Pete’, a customer trading a large SUV for a Jeep. When asked why he buys American:
    • “Or just because I feel patriotic, I buy American cars.”
      – Pete, 07:44
• Humorous Note on Pricing Volatility:
  • “Every day someone opens his mouth and the price goes up. Tomorrow he'll open his mouth, the price goes down.”
    – Ellen Argula, 07:37

Closing Reflection

• Monica Miller summarizes, “His blend of patriotism and pragmatism captures the moment consumers find themselves in during these economic uncertain times.... dealers, they're carefully watching to see what tomorrow's headlines might mean for the next vehicles to be traded in.”
  (Monica Miller, 07:48)

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Notable Quotes & Memorable Moments

• On Fed Priorities:
  “I think they're gonna be more focused on incoming labor market data...”
  – Larry Tantarelli, 02:13
• On Dealer Outlook:
  “We got out of COVID at one point just to hit other issues, especially the tariff issues.”
  – Mark Sheinberg, 06:42
• On Market Volatility:
  “Every day someone opens his mouth and the price goes up. Tomorrow he'll open his mouth, the price goes down.”
  – Ellen Argula, 07:37

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Key Timestamps

• 01:03–03:06: The Fed’s challenge: balancing inflation and employment
• 03:58–08:07: Auto industry focus—tariffs, consumer responses, dealer challenges
• 04:41: Ellen Argula describes consumer reactions to pricing and tariffs
• 05:39: Dealer hopes—and concerns—about EV incentives
• 06:32–07:22: Mark Sheinberg on the roller-coaster economy and shaky ground
• 07:44: Pete’s patriotic rationale for buying American

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Overall Tone and Takeaways

• The episode reflects the underlying caution and adaptation of both businesses and consumers as they react to inflation, tariffs, labor trends, and government incentives.
• Dealers are “walking a tightrope,” forced to quickly adapt to global policy changes and market volatility.
• Both dealers and buyers are keeping a close watch on headlines, bracing for more uncertainty ahead.

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Useful for:
Anyone seeking a succinct yet thorough understanding of the pressures facing U.S. car dealerships, and how these relate to broader economic forces in 2025.

Transcript

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[Nova Safo]

More about jobs or prices From Marketplace, I'm Nova Safo in for David Brancaccio. The Federal Reserve's mandate is twofold Keep prices stable while maximizing employment Last week we learned inflation in July was relatively steady. The Fed's preferred inflation gauge, the PCE price index, came in as expected, holding at a 2.6% annual gain, higher than the Fed wants, but still not terrible. Later this week we'll get the latest read on the labor market after the last report showed major revisions downward in the amount of jobs created over the last several months. So what does the Fed do when it meets later this month? Marketplace's Mitchell Hartman has more.

[Mitchell Hartman]

The most recent jobs report showed mediocre job creation in July, while revisions showed barely any jobs added in May and June. Larry Tantarelli at Blue Chip Daily Trend Report says that really got the Fed's attention.

[Larry Tantarelli]

It seems like their view is that the labor market is weakening and that is a bigger near term concern than the inflation issue, he says.

[Mitchell Hartman]

Inflation still matters to the Fed, but.

[Larry Tantarelli]

I think they're gonna be more focused on incoming labor market data. So the weekly Jobless claims we'll get another payrolls report September 5th.

[Mitchell Hartman]

That could also come in pretty weak, says Drobr Suelas at consulting firm rsm. The labor force is shrinking as baby boomers retire and undocumented workers get deported, meaning job creation could be in the 50,000amonth range without pushing unemployment higher.

[Larry Tantarelli]

There's a big difference between a slower pace of hiring and an increasing pace of firings. We're just not seeing the latter right now.

[Mitchell Hartman]

But if the economy actually starts losing jobs and unemployment spikes, the Fed will be under pressure to cut interest rates more aggressively, which Brusuela says will be hard if tariffs also cause a resurgence in inflation. I'm Mitchell Hartman for Marketplace.

[Nova Safo]

Wall street is closed for Labor Day. Markets reopen tomorrow at 9:30.

[Amy Scott]

Foreign.

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[Nova Safo]

Car dealerships are grappling with a new reality. As tariff policies reshape their bottom lines. They're walking a tightrope along with their partner automakers to absorb additional costs in an industry that already contends with relatively slim margins. The BBC's Monica Miller reports the end.

[Monica Miller]

Of the summer is just around the corner and auto dealers are looking to entice buyers with Labor Day sales to sell their 2025 inventories. At a car retailer in Larchmont, about an hour outside of Manhattan, a shiny red Jeep with a white bow is on display. A well air conditioned showroom and new car smell greet customers when they arrive.

[Ellen Argula]

So there's definitely been a slowdown.

[Monica Miller]

Ellen Argula runs her family business, which has been selling cars since 1961. She says it's been a wild ride over the past few months.

[Ellen Argula]

In April this year we had a big surge in business because of the tariffs and people wanted to lock into low pricing before the tariffs took in effect. But then after that settled in, I think the following months have been slower. I think consumers are concerned about pricing, how the tariffs will affect pricing on new cars. So they're delaying their purchases. They're either extending their leases or doing more with less, maybe cutting down on the number of cars in their household or buying pre owned.

[Monica Miller]

Ms. Gula says she's seeing some customers interested in buying electric vehicles and plug in hybrids because before tax credits expire under the One Big Beautiful Bill act.

[Ellen Argula]

For example, they drive a Wrangler hybrid. They love it and they definitely want to get that vehicle before the incentives end in September 30th. So we are seeing that for sure. And it's hard to predict the future of EVs. We've invested a lot in the technology and we trained our employees. So we're hoping that there's some fair resolution in the Future. That includes EVs.

[Monica Miller]

The dealership sells mostly American iconic brands like Jeep, Chrysler, Dodge and Ram, which are under the parent company Stellantis. Tariffs have already cost the automaker roughly $1.7 billion. Its chief executive says 2025 is turning out to be a tough year. Mark Sheinberg is the president of the Greater New York Automobile Dealers Association.

[Larry Tantarelli]

It's about affordability. Everything's about affordability.

[Monica Miller]

With a fluctuation of interest rates and fuel prices, he says. Working in a car business is like riding a roller coaster.

[Larry Tantarelli]

It's got its ups and its downs. It's the bellwether of the economy in some respects. We got out of COVID at one point just to hit other issues, especially the the tariff issues. So dealers are always trying to piece it all together to figure out how they make their operations work, lots of times beyond their control. If interest rates go up, vehicle sales are impacted. If gas prices go up, same thing occurs on the retail level.

[Monica Miller]

Many American manufacturers are absorbing the additional costs that come with tariffs, but Mr. Sheinberg says that can't last forever.

[Larry Tantarelli]

So I think there's a feeling from consumers and from dealers that we're on.

[Monica Miller]

Very shaky ground again for customers like Pete. He thought the time was right to trade in his large SUV for a Jeep.

[Larry Tantarelli]

Every day someone opens his mouth and.

[Ellen Argula]

The price goes up. Tomorrow he'll open his mouth, the price goes down.

[Monica Miller]

Do you buy an American car just because you like them or because you feel patriotic?

[Ellen Argula]

Or just because I feel patriotic, I buy American cars.

[Monica Miller]

As Pete drives his black Jeep off the lot, his blend of patriotism and pragmatism captures the moment consumers find themselves in during these economic uncertain times. As for the local dealers, they're carefully watching to see what tomorrow's headlines might mean for the next vehicles to be traded in.

[Nova Safo]

That was the BBC's Monica Miller reporting. Our free daily wrap newsletter brings all the day's news and numbers straight to your inbox every weekday evening. It'll take you less than five minutes to catch up. Read the latest issue and Sign [e-mail] subscribe. I'm NovaSafo with a Marketplace Morning Report from APM American Public Media.

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