How auto tariffs will affect marketing spending

Car buyers won’t be the only ones feeling the pain from new automotive tariffs. The taxes, set to take effect on April 3, could lead to a pullback in automotive marketing spending, potentially affecting agencies, ad sellers and anyone associated with what MediaRadar measures as the fifth-largest ad-spending category in the U.S., accounting for $14.3 billion in measured media last year. To be sure, automakers and agencies are still assessing how they will respond to the tariffs, which amount to a 25% tax on vehicles built outside the U.S. But experts widely predict a slowdown in buying as prices rise, leaving auto brands to find savings elsewhere to protect profits. That could put marketing budgets in the crosshairs. “A 25% tariff is not something that automakers can easily absorb in their bottom lines, so they will be looking at ways to cut costs in order to ensure consumers are seeing the least amount of price change,” said Jessica Caldwell, head of insights at car shopping site Edmunds. She expects that brands might cut incentive programs “and perhaps the advertising that goes along with bringing awareness to those deals.” And “given the severity of the tariff,” other advertising could be cut, too, she said. President Donald Trump proposed the tariffs to incentivize more U.S. manufacturing, but setting up car plants in the states is a long process. Tariffs will also apply to imported major auto parts, such as engines and transmissions, with those duties set to take effect no later than May 3. Also read: 5 tips for brands dealing with the widening income gap Detroit’s Big 3 automakers—Ford, Stellantis and General Motors—are lobbying the Trump administration to exempt lower-cost parts from the tariffs, arguing the move would drive up costs by billions of dollars, Bloomberg reported this week. Trump could provide more details today, when he is expected to announce additional “reciprocal tariffs” on a host of goods aimed at penalizing countries that place tariffs on U.S. exports. Of the roughly 16 million cars and pickup trucks sold in the U.S. last year, 46% were imported, according to S&P Global Mobility, which specializes in automotive data. Volvo, Mazda, Volkswagen and Hyundai Motor (including Genesis and Kia) imported at least 60% of their vehicles sold in the U.S. in 2024, according to S&P, with Ford at the low end with about 20% imports. The auto tariffs, announced on March 26, are expected to increase the average vehicle price by 7% to 10%—and possibly slightly more than that “in a worst case where all parts are tariffed,” Evercore ISI stated in a March 30 note to investors. Under the current proposal, S&P projects that total annual U.S. vehicle sales could fall to 14.5 million to 15 million in the coming years. Several automakers reached by Ad Age, including Volvo, Mazda, Hyundai, Nissan and Honda, declined to comment on how the tariffs will affect ad spending and marketing decisions. Volkswagen of America referred to a March 26 statement from Jennifer Safavian, president and CEO of automotive trade group Autos Drive America, who said the tariffs “will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the U.S.” Shenan Reed, global chief media officer at General Motors, fielded a question Tuesday about the effect of the tariffs on advertising. “It is still looming for all of us,” Reed said, speaking at the Association of National Advertisers Media Conference in Orlando. “I think our businesses need to adjust first, and our money will adjust second. I’m super confident. I think you are too,” she said, directing her comment to Marla Skiko, global head of media and intelligence at Ford, who chairs the ANA Media and Measurement Committee and was moderating the session. “Think about what we’ve been through, from COVID to chip shortages to supply shortages, like one thing after another,” Skiko replied. “And we just have to figure out how we rise to the challenge and work through it.” Several agency executives who spoke to Ad Age on the condition of anonymity suggested automakers are still formulating their marketing response. “I could see a reality where they pull marketing money to keep consumer costs low,” said one executive. “I think it is a wait-and-see for everybody out there, and we’re hoping that things become more clear in the next month or so, so we can start looking forward to the upfront,” said one exec at a media agency, referring to the annual long-term ad-buying season. More: Ad Age’s 2025 TV upfronts and NewFronts calendar Changing ad priorities Tim Yost, automotive and industrial marketing director at AlixPartners, a global consulting firm, said that “winning marketers will likely be those who figure out how to do more with less, including better implementing AI-related marketing tools as well as traditional tools. And that’s probably as true for marketers of American-made cars and trucks as it is for the marketers of imports. Thin profit margins are pretty much an across-the-board thing. Hopefully, they will be the mother of invention, too.” Automakers, for the most part, have remained loyal to the TV industry, still relying on the medium for big branding campaigns, typically around new model launches, especially during live sports programming. But there is a chance that some spending on live sports and awards shows could be at risk, as automakers focus more on direct response and loyalty marketing, suggested Joe Kyriakoza, who consults with automakers as VP and general manager of Polk Automotive Solutions at S&P Global Mobility. He pointed to the fact that auto spending on this year’s Super Bowl was already down, with Stellantis the only automaker buying ads. If the CEO of an automaker asks their chief marketing officer to cut 20% of marketing spend, “typically, they’re going to go to something that’s less efficient,” he said. And if “a sponsorship of the Grammy Awards is less efficient, then they may cut that,” he said, hypothetically speaking. “But it really just depends on the trajectory of the economy that then trickles down to new car sales.” Also read: What brands need to know about a potential recession Jennifer Vianello, CMO of Cars Commerce, owner of auto marketplace Cars.com, predicted shifting consumer priorities, with some auto intenders buying cars now before prices go up and others pausing decisions. “The prices are going to see volatility and therefore consumer demand is going to see volatility as well, which makes it even harder than it normally is to find an in-market audience,” she said. Cars.com has focused its marketing response on educational content, including publishing a list of vehicles assembled in Canada, Mexico and China that “are most at risk of a tariff-related shake-up.” Buy now? In the short term, talk of the tariffs appears to have boosted sales, as shoppers rush to buy cars and pickup trucks before prices go up. Monthly retail sales in March jumped 19% at Ford Motor Co., 15% at Hyundai and 25% Kia, the companies reported this week, according to Automotive News. “You could definitely tell that people were here to buy and were aware of what’s going on,” Joel Wickizer, sales manager at Audi Huntsville in Alabama, told the publication about strong demand this past weekend. Subaru White Plains in New York sent emails to customers with the subject line “Market Uncertainty With Possible Tariff Increase.” The message, signed by a sales manager, stated that “as a valued client, you have priority access to our exclusive in-stock selection before availability tightens due to increasing demand. If you’d like to lock in current pricing and secure your preferred model, I’d be delighted to assist you personally.” In the Chicago area, Packey Webb Ford in the Downers Grove suburb, ran radio ads referencing the tariffs. On its website, it encouraged consumers to “buy now and save” to “avoid tariff price increases.” Meanwhile, consumers are discussing tariffs on social media, including on one Reddit thread called “Tariffs and Honda.” “Truthfully, nobody knows what’s going to happen until it happens,” said one commenter. “That goes for consumers, dealers, and even Honda. I’m sure everyone is scrambling to find out what this means.” Contributing: Jack Neff Data-Driven Marketing Playbook Join us May 22 in NYC to explore how data powers marketing Learn more here

How auto tariffs will affect marketing spending

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