Auto finance in the age of tariffs: Navigating uncertainty with confidence 

The recent imposition of new tariffs by the U.S. government on foreign-made goods—particularly automobiles—has set off a wave of questions across the auto finance industry. For those of us who weathered the volatility of the pandemic, the early reactions to this news feel familiar: concern over inventory, pricing, and lending volumes. But if there’s one lesson we should carry forward, it’s this—don’t panic. People still need cars, and auto finance will adapt. 

That said, the landscape is about to shift in real ways. 

It’s not just about imported cars

At first glance, tariffs on imported vehicles might seem like a targeted policy. But in the world of modern manufacturing, it’s never that simple. Many of the vehicles labeled “American-made” still rely heavily on parts sourced internationally. Components can cross borders multiple times before a car rolls off the assembly line. With these new tariffs in play, the cost implications could ripple through the entire supply chain—affecting cars assembled both abroad and here in the U.S. 

This kind of uncertainty creates hesitation across the board: Original Equipment Manufacturers (OEMs) rethink production strategies, dealers reassess inventory, and consumers delay purchases. We may see some initial headwinds as everyone adjusts to the new economic equation. But again, we’ve been here before. 

A boost for the used car market

Just like during the early days of COVID, new vehicle inventory is likely to tighten—this time due to increased costs rather than a halt in production. And when new cars become less accessible, consumers naturally turn to used vehicles. In 2020, used car prices hit record highs as buyers scrambled for affordable options. We’re likely to see a similar pattern in the months ahead. 

For lenders, this shift brings opportunity. As demand grows in the used segment, financing activity will follow. But not all lenders will benefit equally. 

Banks may have the advantage over captives

Captive finance arms tied to OEMs that rely heavily on international manufacturing could face a tougher climb. Limited inventory—especially of used models—could constrain their ability to lend. In contrast, banks with broader portfolios and more diverse lending channels may be better positioned to meet evolving consumer needs. Consumers will still buy what they can afford, and banks are in a strong place to offer flexible solutions across both new and used segments. 

This isn’t to say captives are out of the game. But it does reinforce the need for agility—on both the origination and servicing sides of the business. 

Volatility, then stability

In the short term, we may see a dip in application and funding volume. But just as we saw during the pandemic, auto demand doesn’t disappear—it just shifts. Consumers still need reliable transportation. They’ll seek out the best options within their budget, and they’ll finance accordingly. The key is for finance organizations to stay adaptable, avoid knee-jerk reactions, and be ready to move with the market.  

At Odessa, we understand that periods of uncertainty aren’t the exception anymore—they’re becoming the rule. Whether it’s a global pandemic, economic turbulence, or a policy shake-up, the auto finance industry needs to respond with speed and clarity. That’s only possible with platforms built for flexibility.  

Our platform enables lenders to pivot quickly—adjusting lending criteria, launching new products, integrating with new partners, and responding in real-time to consumer demand. When conditions change, your technology shouldn’t hold you back. It should help you move forward.  

So yes, things may get complicated. The tariff situation will take time to play out, and no one has all the answers today. But what we do know is this: Consumers will keep buying cars, and lenders who are ready to adapt will keep doing business. 

Stay calm. Stay responsive. And make sure your technology partner is ready to move with you.