The automotive industry is facing unprecedented times. From prolonged elevated interest rates to tariffs, dealers are navigating uncharted territory yet again. This new era demands bold decisions, long-term thinking, and strategic pivots.

Here’s how smart dealers and general managers can win amid volatility — and why the commercial department may be the most resilient in their portfolio.

Understand what tariffs really mean for dealerships

Headlines may warn of 25% tariffs, but the actual impact is more nuanced. The tariffs are not based on MSRP, but rather levied at earlier stages in the supply chain. The result is likely a much smaller percentage. Still the repercussions are real: production disruptions, supply chain delays, inventory challenges and eventual consumer price hikes. Dealers should brace for product shortages, OEM realignment, and possible vehicle discontinuations.

Shift from panic to profit: Sell, don’t save, your way out

Dealership profits soared in recent years, as tight inventory allowed for margin control and expense discipline. Today, dealers and general managers may be tempted to cut expenses and hunker down for the storm to pass. But tariffs, inflation, and affordability challenges won’t be solved by cost-cutting alone. The way to win is by selling your way out.

Commercial inventory is constantly in demand because businesses always need vehicles to serve their customers. These work trucks and vans are essential to the livelihood of these business owners. Dealerships need to invest in the right inventory, price it right and accelerate returns. Sitting on the sidelines will cost more, both now and later, than jumping in with a solid strategy.

Double down on commercial as a true business unit

Commercial isn’t a bolt-on department — it’s a business. Some dealers and general managers have dabbled in the success of a commercial business without fully committing time and resources towards its success. That’s like the farmer trying to harvest the seeds before watering.

A better approach is to look at the commercial department today as if it were the F&I department from 15 or more years ago. While a commercial vehicle department may be new to some, it’s a profit center, but unlike F&I, this profit center doesn’t live and die by leads from the sales team. It’s fed by loyalty, repeat customers and word-of-mouth marketing that offer compounding value time after time. Those who invest and give it the chance to grow — rather than expecting instant gratification — will see a plentiful harvest.

 Inventory strategy is more critical than ever

While some OEMs increased production and built-up inventory to prepare for tariffs, that preparation will dwindle quickly (in fact, we are already seeing it). Dealerships stocking the right trucks needed for their market before auction and wholesale prices see significant increases will benefit the most. Hesitating could mean missing out — and that window of time is closing quickly.

But even once prices are impacted, selecting the right inventory is still key. Look to software and partners that help strategically analyze and predict inventory turn rates to ensure you’re investing where you’re likely to see the greatest return.

Used commercial is the next big frontier

Used retail gets all the attention when new vehicle prices are threatened, but the used commercial industry is an untapped goldmine of opportunity. Unlike consumer buying patterns, business needs don’t vanish when dollars get tight. Businesses still need vehicles to provide the services, transport the goods, and haul the equipment that enables them to make money.

They may not have the profits to buy a shiny new truck, and that’s where used commercial inventory comes into play. That means that smart dealers and general managers will expand their used commercial footprint too. This market is poised for growth as affordability, and possibly even availability, becomes an issue in new vehicle purchases.

The bottom line?

Tariffs, inflation, and shifting production strategies may be outside a dealership’s control. But the way in which these dealers and general managers respond? That’s the opportunity. Those who lean into their commercial business, invest wisely, and embrace long-term thinking are the ones who will emerge stronger — and more profitable — on the other side.

Dealers and general managers are being dealt the same hand nationwide. It’s how they’ll play it that will make all the difference.

James Press is a senior advisor at Work Truck Solutions. He is the former chief operating officer of Toyota North America and former co-president and vice-chair at Chrysler.