By: Carlos A. Bazán,
Green Motion International
Carlos Bazán is the Head of Operations for Americas for Green Motion and U-Save. He also serves on the Board of Directors for the American Car Rental Association, is a member of the Car Rental Committee for the National Defense Transportation Association, and serves as an advisor for the National Renewable Energy Laboratory’s transportation electrification project (Athena).
The opinions expressed in this article are only those of the author and not necessarily those of ACRA.
The implementation of steep auto tariffs this spring has triggered a rapid shift in vehicle markets, raising red flags for rental car operators across the U.S. An added 25% tariff on imported vehicles and parts from Mexico and Canada in addition to at least 10% from other countries has sent new car prices upward, thinned inventories, and reignited pressure on used vehicle values—factors that are already beginning to reshape fleet acquisition and rotation strategies in the rental space.
According to Cox Automotive (Cox Automotive Forecast), new vehicle inventory in the U.S. fell by more than 10% in April following a surge in March sales as buyers sought to beat the tariff deadline. That last-minute buying frenzy temporarily boosted annualized sales to 17.8 million units, the highest level in four years, but left dealerships with only about 10 days’ worth of supply nationwide.
With many popular models affected by the import duties, sticker prices are expected to rise significantly. Cox Automotive estimates the average increase per vehicle could reach $5,300, particularly hitting affordable sedans and compact SUVs that rental fleets commonly rely on. This comes amid an existing shortage of low-cost vehicle options. Early into April, Erin Keating, analyst for Cox Automotive said that, “Affordable new vehicles are already few and far between (Auto Industry Braces for Impact).” Interestingly enough, the following week, on Monday, April 7th, most fleet inventory had been already accounted for and purchase banks had closed with many manufacturers at least for Year Model 2025, while there is uncertainty on Model Year 2026.
These price increases may have a direct impact on rental fleet composition. Manufacturers facing higher import costs may prioritize retail sales over fleet sales, and some lower-margin models could even be pulled from the market. Rental companies may find their traditional fleet orders delayed, altered, or cut entirely.
In response, industry leaders expect a rebound in used vehicle demand as consumers and commercial buyers turn to more accessible options. Indeed, wholesale used car prices are already ticking upward, with auction data from March showing a 3.4% month-over-month increase, the strongest gain in two years, according to Manheim’s numbers. Analysts predict tariffs will drive used values higher by at least another 2% to 3% this year, which has been already seen in Mannheim Market Report used car values across all manufacturers.
For rental companies, the impact is mixed. Retired rental units are fetching stronger resale values, helping offset some of the cost of acquiring new vehicles. Vehicles coming out of service are also showing lower-than-average mileage, reflecting the industry’s recent efforts to refresh fleets during the inventory rebound of 2023.
However, should supply tighten further, companies may need to extend their fleet cycles. Instead of replacing vehicles at 12 to 18 months as is typical, operators may hold onto units longer to avoid buying at the new peak. This strategy mirrors the post-pandemic years, when global supply chain issues forced rental companies to adapt to aged fleets and scarce replacements.
As demand shifts to domestically produced models, automakers with U.S. manufacturing capabilities could become preferred vendors for fleet buyers. Meanwhile, imports facing tariffs may be less available or subject to long lead times. In either case, the transition could lead to greater variation in vehicle types across fleets, including possible shifts toward hybrid and electric vehicles. Unfortunately, as recent history has shown, electric vehicles are can be a difficult option for car rental operators given adoption problems by the public stemming from lack of confidence of the charging infrastructure availability, slow charging times, hesitation about electric vehicles operation, and range anxiety, among others. In addition, operators may be deterred by the higher cost of maintenance and unpredictable resale value.
Increased acquisition costs could also affect the affordability of rentals for consumers. With sticker prices rising and cost-per-unit inflating, operators may be forced to raise daily rates or more actively work on revenue recovery at the counter and post-rental to maintain margins.
Cox Automotive’s Chief Economist Jonathan Smoke cautioned that if the tariffs remain in place, the market could see sustained elevated vehicle prices and supply constraints reminiscent of the 2021 chip shortage era. “After an initial surge in buying, we expect vehicle sales to fall, new and used prices to increase, and some models to be eliminated if tariffs persist,” Smoke said (Auto Industry Braces for Impact).
The long-term effects of the tariff policy are uncertain. Unlike the pandemic-induced disruptions, which were largely expected to ease over time, trade-based pricing shifts could remain in place for years. As fleet operators evaluate their 2025 and 2026 acquisition strategies, many will be navigating an evolving landscape where the cost of doing business continues to climb.
Industry analysts suggest that those who can adjust fleet mix, extend vehicle lifecycles intelligently, and leverage strong remarketing channels may fare best in the coming cycle. Rental companies are encouraged to coordinate closely with manufacturers, monitor secondary markets, and consider advanced forecasting tools to adapt in real-time to these shifts.
As the summer travel season approaches, travelers may notice higher prices and fewer vehicle options at rental counters. For operators, balancing cost, availability, and customer satisfaction will require flexibility and strategic thinking in an environment that remains volatile and uncertain.