President Donald Trump’s sweeping automotive tariffs are reshaping the car market – and used car dealers may be the biggest winners.
With 25% levies on imported vehicles and parts now in effect, new car prices are surging, pushing budget-conscious consumers toward more affordable pre-owned options.
According to senior Morgan Stanley analyst, Adam Jonas, the Manheim Used Vehicle Value Index jumped nearly 2% month-over-month in June and more than 6% year-over-year, signalling strong demand.
Jonas notes that consumers are “pre-buying” ahead of the full tariff rollout and the expiration of EV tax credits, further fuelling price inflation.
While automakers brace for margin compression and notable supply chain disruptions – used car dealers are positioned to thrive. Jonas believes three stocks: Group 1 Automotive, Carvana, and CarMax stand to benefit the most from this tariff-driven shift in consumer behaviour.
CarMax Inc (NYSE: KMX)
CarMax, the largest used car retailer in the US, is already seeing the upside of Trump’s tariffs.
In its latest earnings report, the company posted a 9% year-over-year increase in used vehicle unit sales – the fastest growth since 2021.
CEO Bill Nash attributed the surge to both internal strategy and external market forces, including tariff speculation.
CarMax has expanded its inventory of newer pre-owned vehicles, especially those priced under $20,000, to meet rising demand.
Last month, William Blair reiterated its bullish view on KMX shares, citing the company’s national footprint and operational efficiency.
With tariffs making new cars less accessible, CarMax’s value proposition is more compelling than ever.
Carvana Co (NYSE: CVNA)
Carvana is another standout beneficiary of higher tariffs under President Trump, according to the Morgan Stanley analyst.
According to CEO Ernie Garcia, the company is “unlikely to be directly impacted” by the tariffs, since it operates exclusively in the US and sells only used vehicles.
In fact, Garcia believes tariffs could be a tailwind, driving more consumers toward CVNA’s online platform as new car prices spike.
The company reported record Q1 profits of $373 million and sold 133,898 vehicles – a 46% increase year-over-year.
Street currently rates Carvana stock at “overweight” due to high visibility growth and operating leverage.
With its reconditioning centers and digital-first model, Carvana is well-positioned to capture the shift in consumer behavior.
Group 1 Automotive Inc (NYSE: GPI)
Group 1 Automotive is a lesser-known but strategically positioned player in the used car space.
The company sells both new and used vehicles and operates collision centers across the US and UK.
Shares have climbed nearly 14% in 2025, outperforming many peers. Morgan Stanley’s Adam Jonas included GPI in his list of overweight-rated stocks poised to benefit from tariffs.
With a diversified revenue stream and strong geographic footprint, Group 1 is insulated from the worst effects of trade policy volatility.
Additionally, a 0.41% dividend yield makes GPI shares all the more attractive to own in 2025.
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