Survival strategies for Canadian dealers
How can dealers maintain sales momentum if a 25 per cent U.S. automotive tariff is sustained?
The Canadian auto landscape has been fundamentally reshaped by the implementation of 25 per cent tariffs on Canadian automobiles that came into effect on April 3, following earlier steel and aluminum levies.
While the industry grappled with the unprecedented challenges of a pre-sold spring market, dealers now face an entirely new reality shaped by trade policy that affects pricing, inventory planning, and customer relationships across the country.
With a proposed 50 per cent international tariff on steel, automotive manufacturers and dealers are hoping for a negotiated trade deal with the U.S. that will be tolerable and not negatively impact retail vehicle sales.
While some manufacturers have responded to curb the costs of tariffs by eliminating incentives such as ‘Employee Pricing’ and other credits, the future is not clear and planning for a worst-case scenario is prudent. These are some strategies that dealers can consider should these tariffs linger.
Customer loyalty: Your shield against economic turbulence
In a tariff-affected marketplace, existing customers will become more valuable than ever.
Dealers can consider comprehensive loyalty programs that extend far beyond traditional purchase incentives, creating genuine value propositions that justify potentially higher vehicle costs and possible longer delivery timelines.
VIP customer programs could include enhanced trade-in valuations that help offset tariff-related price increases, complimentary maintenance packages that provide ongoing value, and priority access to inventory that may become increasingly scarce.
Keeping your client base updated and maintaining transparent communications about market conditions can ensure your clients understand the external factors affecting pricing while feeling supported through the process.
Digital marketing: Communicating value in complex times
Effective marketing becomes even more critical when external factors complicate traditional selling approaches.
Digital campaigns should address not just vehicle features but also value propositions that justify potentially higher costs and longer delivery times.
Consider campaigns that focus on total cost of ownership, reliability, and long-term value rather than just initial purchase price.
Social media strategies can include transparent discussions about market conditions, virtual showroom tours that maximize limited inventory exposure, and customer testimonials that build confidence.
Community engagement: Build trust through transparency and commitment
Dealership-hosted events can take on a new importance as relationship-building tools.
Community engagement activities that demonstrate the dealership’s commitment to local economic stability and customer support create positive brand associations that transcend price competition. Cross-promotional partnerships with local businesses can reinforce community ties while providing mutual support during challenging economic times.
These events can serve multiple strategic purposes: they maintain customer engagement during uncertain times, generate leads despite market challenges, and create positive brand associations that translate into long-term customer loyalty even when prices are affected by external factors.
Creative financial solutions for challenging times
Use creative financing structures that include deferred payments which will assist potential customers rationalize a higher price point if they have 60 to 180-days to start paying for their new vehicle. Offering the equity in a customer’s trade-in as a cash back has proven a huge selling tool for many dealers over the years yet, many have never even attempted offering such a solution.
Improving your lease penetration can become an attractive solution in a tariff environment. With many lease payments lower than finance payments, higher prices become less impactful as the payment is used to rationalize stepping into a new vehicle.
The added benefit would be creating a more predictable client base selling more vehicles over a customer’s life span than traditional long-term financing offers.
Sales team excellence: Consultative selling
In a tariff-affected environment, the skills and knowledge of sales teams become more critical than ever.
Comprehensive training programs covering value-based selling techniques can pay dividends in both customer satisfaction and sales performance. Customer-first methodologies, supported by ongoing training and development can create competitive advantages that transcend price competition.
In a pre-sold market, selling vehicles was like fishing when the fish were jumping in the boat. When the flood gates close, many Sales Consultants will be staring at each other wondering where their next paycheque will come from.
Training your sales team on ‘How to Build a Business within a Business’ will never be more important to maintain your sales momentum and minimize turnover of your sales staff.
Looking forward: Resilience through adaptation
The implementation of 25 per cent automotive tariffs will create both challenges and opportunities that will define the Canadian automotive retail industry’s future direction. Dealers who view this period as a catalyst for strategic evolution rather than merely a temporary disruption will position themselves for sustained success.
The lessons learned during this period of how critical customer relationships must be sustained, the power of value-based selling, and the value of transparent communication will continue to influence industry best practices long after trade policies normalize.
