How will Tariffs Impact the Towing Industry in 2025

The global automotive industry is a complex network of manufacturers, suppliers, and consumers, all interconnected by a web of supply chains that stretch across continents. In 2025, recently proposed tariffs imposed on vehicle imports and automotive parts will likely significantly alter this landscape. For towing equipment retailers and towing operation owners, understanding these potential changes is essential to prepare for shifts in the types of vehicles on the road and the equipment needed to service them. Our team compiled this unbiased look at how these tariffs may impact the towing industry based on vehicle pricing, inventory availability, and consumer purchasing behavior.

How Tariffs Influence Vehicle Pricing and Availability

Tariffs are government-imposed taxes on imported goods, and when applied to the automotive industry, they affect both finished vehicles and the parts used to assemble them. In 2025, a 25% tariff is expected to apply to vehicles and automotive components imported from key trading partners, including Canada and Mexico, which will likely add thousands of dollars to the cost of manufacturing and purchasing new vehicles. Industry experts estimate that new car prices may increase by $4,000 to $10,000 depending on the make, model, and origin of the vehicle.

Higher production costs often get passed on to consumers, resulting in fewer buyers entering the new car market. In response, many automakers are reassessing production strategies to manage costs, with some shifting manufacturing operations to domestic facilities and others reducing the variety of vehicle models offered to focus on higher-demand segments.

Changing Consumer Behavior: Longer Vehicle Retention and Shifts in Popular Models

An increase in new vehicle prices is expected to lead to several notable changes in consumer behavior:

1. Extended Vehicle Ownership: Consumers are likely to keep their vehicles longer to avoid the higher costs of purchasing new cars. Longer retention periods, averaging 12 years or more may become the norm, resulting in an older fleet of vehicles on the road.
2. Greater Demand for Used Vehicles: As new car prices rise, many consumers will turn to the used vehicle market. This increased demand can drive up prices for used cars, making them less affordable and prompting consumers to hold onto their existing vehicles even longer.
3. Shifts Toward Compact and Cost-Efficient Vehicles: Compact cars and affordable SUVs are expected to remain popular as consumers seek budget-friendly options. Hybrids and plug-in hybrid vehicles (PHEVs) may also gain market share, as they offer improved fuel economy without the higher upfront cost of full battery-electric vehicles (BEVs).
4. Changes in Electric Vehicle (EV) Adoption: While global trends have encouraged a shift toward EVs, affordability remains a significant barrier. Proposed tariffs affecting parts used in EV production could slow down adoption rates in certain markets. Consumers seeking alternatives to higher-priced EVs may opt for hybrid options instead.

How will Proposed Tariffs Impact the Towing Industry?

These shifts in consumer purchasing decisions and the resulting changes in the types of vehicles on the road will have direct implications for towing companies and equipment retailers. Below are the key trends that towing professionals should be aware of:

1. Older Vehicles on the Road Require More Frequent Tows

As consumers retain their vehicles for longer periods, the likelihood of mechanical failures increases. Towing operators should anticipate a rise in service calls related to older cars experiencing breakdowns, especially as parts for repairs become harder to source or more expensive. Investing in versatile towing equipment capable of handling various vehicle sizes and conditions will be essential.

2. Heavier and Larger Vehicles Present Equipment Challenges

While some consumers will opt for compact cars, the market for full-size trucks and SUVs remains strong. These larger vehicles often require specialized towing equipment, such as reinforced dollies and heavy-duty tow bars, to ensure safe and efficient recovery. Collins Manufacturing, known for its durable towing equipment, offers solutions like the Hi-Speed Dolly that can accommodate the increased demand for towing heavier vehicles.

3. Hybrid and Electric Vehicles Require Specialized Towing Techniques

The growing number of hybrid and plug-in hybrid vehicles on the road presents new challenges. Unlike traditional vehicles, certain hybrids and EVs cannot be towed with their drive wheels on the ground without risking damage to their drivetrain or battery systems. Towing operators will need to stay informed about manufacturer guidelines and equip themselves with flatbed trucks or specialized dollies designed to safely transport these vehicles.

4. Increased Demand for Roadside Assistance Services

With older vehicles on the road and higher repair costs, drivers may rely more on roadside assistance programs. Towing companies should consider partnering with insurance providers and roadside assistance networks to capture this growing segment of the market. Efficient service and proper equipment will be key to meeting customer expectations.

5. Used Vehicle Transport Becomes More Common

As the used car market grows, transporting vehicles between dealerships, auctions, and buyers will be a more frequent request. Towing companies should prepare for an uptick in non-emergency transports, which may require different scheduling and pricing strategies.

Collins is at Your Side as Proposed Tariffs Impact the Towing Industry

The impact of proposed tariffs on the automobile market in 2025 and beyond is expected to bring significant changes to the types of vehicles on the road. For towing equipment retailers and towing operation owners, staying informed about these trends is critical for making strategic business decisions. Longer vehicle retention, increased demand for towing older cars, and shifts in vehicle types all point to the need for versatile, high-quality towing equipment.

Collins Manufacturing is committed to supporting the towing industry through these changes by providing equipment designed to meet evolving demands. By equipping your fleet with the right tools and staying proactive about market trends, you can ensure your business remains competitive and prepared to handle whatever the road ahead may bring. Contact us today to discover how Collins equipment will keep your company on the road to success.