Tariff Fears Cause 150K Sales In March, Tesla and China, How to Develop Frontline Workers

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Episode #1015: Today we’re diving into how global tensions are reshaping Tesla’s China strategy, why car buyers rushed showrooms ahead of auto tariffs, and why Harvard says better mentoring might be the secret to fixing retail’s revolving door of turnover.

Show Notes with links:

• Tesla has stopped taking orders for its U.S.-made Model S sedans and Model X crossovers in China as trade tensions between the U.S. and China flare up once again.
  • China will increase tariffs on U.S. goods to 125% on April 12, including autos.
  • Tesla’s Model S and X are built in Fremont, California, making them directly affected.
  • The option to order these models disappeared from Tesla's China site in early April.
  • Tesla’s Shanghai factory, which makes the Model 3 and Y, isn't affected by the new tariffs.
  • Model S and X made up fewer than 2,000 of Tesla’s 661,000+ Chinese sales last year.

• A spike in new car sales last month wasn’t just spring fever. According to Cloud Theory, auto shoppers raced to dealerships in March to beat looming tariffs.
  • March saw 1.31 million new vehicles sold — a 38% jump from February.
  • Cloud Theory attributes 153,000 of those sales to fear of impending price hikes from tariffs.
  • Average marketed prices rose $1,123 from late February through March with SUVs, full-size pickups, and heavy duty trucks seeing the most increase — thanks to V8 engines sourced from Canada.
  • Discounts and incentives dropped by $432 in March as OEMs braced for higher costs.
  • “While this led to very strong results in the short term… the longer-term effects will likely be highly detrimental,” said Cloud Theory’s Rick Wainschel.

• A new Harvard study says the key to lowering retail’s notoriously high turnover may be simpler than we think: invest in frontline workers’ career growth and mentorship.
  • Researchers found that most low-wage workers actually want to keep their jobs to avoid disruption in their lives — especially once they’re comfortable with their coworkers.
  • Over 60% said they’d stay with their employer if they saw a real path to advance, but with many supervisors overseeing up to 20 employees, personalized feedback and coaching are rare.
  • Employees often fear asking for promotions or raises, worried it might cost them their jobs.
  • A related McKinsey study also showed career development was the top reason non-managers wanted to leave. Their advice? Empower managers — because their impact cascades throughout the whole organization.

Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.

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Episode Transcript

Unknown (00:01):
Good morning. Friday, Friday, Friday. April 11. Lot of
stuff going on today. Lot ofannouncements, but tariffs,
pulling forward sales, Tesla andChina. Oh, by the way, this is
the automotive State of theUnion. Still not into that new
intro yet.

Kyle Mountsier (00:18):
I caught it like as you were going through the
three and I was like, okay,like,

Unknown (00:23):
I had this like, little stutter stumble in the beginning
where you could tell I wasn'tfully confident what I was
saying, and it's just right, andthat's why I figured it out.
This is the automotive State ofthe Union. Folks, yeah, if you
haven't, if you didn't knowthat, Kyle, what am I fully
live? Yeah, this is fully live.
We record nothing unashamedlylive that's perfect. Like, who
wants the PR version ofsomething? I mean, nobody wants

(00:44):
that. I mean nobody, nobodywants the soft publicly traded
companies want that. Kyle,that's just why we will never be
publicly traded. I'm just notgoing to be publicly traded, and
I won't have a PR department. Iwould not publicly traded
issues. You know what? I mean,yeah, of course, of course, of
course. Listen, um ASOTU CONtalking about real time
conversation that's unfiltered,where people have their guard
down and they're willing toshare what they're actually

(01:06):
doing and help one anotherinnovate. We call that a soda
con. It's in May. It's about alittle over 30 days away.
Tickets prices are going up onSunday, all right, it'll be our
final ticket race from the earlybird. Early bird that started
back on Black Friday, where wesold a bunch of at half price.
Well, they're about to be fullprice, right? They're not full

(01:26):
price yet. Go to ASOTU CON com.
Get your tickets, both dealertickets and industry partner
tickets. We'll be seeing a bumpin just two days. Make sure you
go there. A lot of the internetabout mobile service lately,
we're going to have an amazingmobile service session, along
with a bunch of other sessionsabout AI and company culture and

(01:46):
sales strategy and bringingmulti growing, multi store,
multi rooftop stores. What elseam I missing? Data Analytics,
marketing, brand building,mobility for the industry. You
know, EVs, growth strategies,acquisition strategies,
acquisition strategies. Lookthis is really a holistic event
where you can actually learn alittle something about learn a

(02:09):
lot of something about the areathat you're most concerned with.
And we always encourage peopleto go to one or two sessions
that do not involve their dailyactivities, because we fully
believe that understanding theentirety of the business and
bringing it closer together ishow you win, is how customers
win. And by the way, a soda conis just a very meticulously put
together event. It's like Southby Southwest meets

(02:31):
nada, maybe somewhere in there,somewhere in there. Oh, and
barbecue, James, gather in thecomments at the barbecue. I
don't know what he's cooking. Nopun intended, but maybe pun
intended, but there's an amazinggraphic out there. Jim ganther
Holding, you know, in front of agrill, holding a spatula. And
he's got something very specialhe's gonna be bringing, we don't
even know what it is. It's gonnabe part of this prize. And we

(02:52):
have an opening keynoteannouncement that we're gonna
make on Monday. So look out forthat. Oh yeah, talk about some
understanding about some bigbusiness across the board,
retail culture, the whole thing.
So we're gonna announce that onMonday, and I'm gonna make an
even bigger announcement. Notthe very first piece, very first
item that's going in the swagbag showed up yesterday. This

(03:14):
is, I mean, you're not gonna beable to see the logo. This is
the ASOTU. This is the ASOTU CONpen, Kyle. You haven't seen this
Yeah, and that's a nice pen. Youcan tell it's, like, thick so
that, like, you can hold itwell, got a rubber grip right
here. The egg doesn't smear, butrolls super smooth. Listen, this
is the pen I've been relying on.
This is the pens we have forcongruent I have. This is a
clarity con pen. That's the samepen. And so, like, Who wants a

(03:38):
crappy pen? So we're live wealso have a really sick craft
paper journal that's going inthe swag. Oh, I felt that this
week. That's your unbelievablejournal in this pen. I mean, not
like you, you, you come to ashow like this for the swag, but
when you get the swag bag,you're gonna be like, I might
come from this flag next year.

(03:59):
That's right. Whatelse? Let's get into it. One
more thing, one more thingbefore, if you are in the
LinkedIn world, you shouldfollow us. So do, by the way,
but you should go to Kyle's pagetoday and just look at the post
he made this morning, becausethere is just an insane amount
of investment capitalrepresented on the stage he's on
and is going to be again. Talkabout that. Talk about that

(04:19):
image? Well,yeah, so you've got Bill Karis,
Chase Frazier and SteveGreenfield in that image, all
with massive funds, yep,multiple massive funds,
supplying the industry with thefunds it needs to innovate. Then
a couple on that, Beth Hill fromthe shop, who they are with Ford
direct has, like, poured tonsinto the industry for innovation

(04:42):
over the last 25 years. That'sright. Then we're adding Brian
Donnelly to the stage thismorning, or this year from auto
tech, VC, and so that's comingin. You've got, I mean, just an
incredible and then I've got acouple dealers that. Going to be
in the pitch tank world as wellthat really know innovation,
that are challenging stuff, thatare going to be poking back at

(05:03):
people. Hey, if you want to beon pitch tank, you can go to
ASOTU CON com, forward slashpitch tank, submit your videos.
Cut off ends tonight. Yes.
And as always, nice. Great job.
Nathan, getting that post upthat fast. That's really good.
He didn't know that was coming.
Wow. And thanks for bringing medonuts today. If you want to
know the story behind that, goto my lab. Story behind that, go
to my last post and read thecomments. So also, want to thank

(05:27):
our friends at Reynolds andReynolds and goo goo for being
our presenting sponsor thisyear, making it all happen. We
have a lot of sponsors that makethis happen, and they're all
committed, just like Reynoldsand goo goo, to seeing this
industry moving forward andserving the industry. So thank
you. It's gonna be a rip roaringshow in just over 30 days. Go to
ASOTU CON com, get your ticketsbefore they go up in price on
Sunday. All right, let's talkabout some news. Tesla has

(05:49):
stopped taking orders for its USmade Model S and Model X
crossovers in China. Wow. Tradetensions between the US and
China flare. It once again. Sono more exports of Teslas to
China. Right now, China is goingto be increasing its tariff on
US goods to 125% on April 12,including cars. Tesla's Model S
and X are built in Fremont,California, making them directly

(06:12):
affected the option to orderthese models did disappear from
Tesla's China site early AprilTesla's Shanghai factory, which
makes the model three and y isnot affected by the new tariffs.
Obviously, the Model S and Xmade up fewer than 2000 of their
overall 661,000 unit sales inChina. So I don't think you know

(06:32):
they're gonna be fine. It'sactually probably a little
easier for them.
It's way easier think about allof the shipping logistics that
you don't have to worry aboutfrom now on. But also now you've
got 2000 more vehicles that areus made, that aren't affected by
tariffs, that that US customerscan also purchase. So look at
the look at the way that thatkind of just shifted. It gave
more access to some of thosevehicles and a higher capacity

(06:55):
turn rate on vehicles that inthe US are more sought after
because we look for slightlylarger vehicles than, like, the
model three would maybe be inthe US, like, we're more of an
SUV culture. So I think, Man,this probably, this actually, is
probably, like, really good forTesla overall.
I mean, obviously they're notcommenting. I think they still
don't have a PR department. Theydon't have their PR department

(07:16):
is one guy tweeting. One guess,can you imagine, for better or
for worse, for better or forworse, it's like that. That's
like, that's like a full onmarriage statement. It's like
sickness and in health, ElonMusk will be our total PR
department. I know we still calltweeting Xing.
Are you allowed to call? Yeah?
What? What do people say? Idon't even know what people say.

(07:37):
People say I saw your tweet on XYeah. That's weird.
Going on next to tweet, tweetingon X today, I don't know Well,
speaking of that, last one feltweird. Keep on. We need. We need
to just stop. Just out. Just getthe stop. Today, a spike in new

(07:57):
car sales last month wasn't justspring fever. According to cloud
theory, auto shoppers race thedealerships in March, we know to
beat looming tariffs. Here's thehere the numbers, though, March
saw 1.3 1 million via newvehicles sold a 38% jump from
February. Cloud theoryattributes, 153,000 of those
sales were pull ahead, pullforward sales due to fear of

(08:20):
impending price hikes fromtariffs, average marketed prices
rose about $1,100 from Februarythrough March, with SUVs, full
size pickups and heavy dutytrucks seeing the most increase
thanks to v8 engines sourcedfrom Canada, so the ones that
have been effective sooner,discounts and incentives dropped
by $432in March as OEM braced for
higher cost. Here's a quote fromCloud theories. Rick Wayne soul

(08:43):
says, while this led to verystrong results in the short
term, the longer term effectswill likely be detrimental.
Yeah, you look at all the pullahead here, right? And that's,
that's, I think we're going tosee that again in April, right?
Because not all of those tariffshave gone in. So how much pull
ahead are we going to have, andwill the demand still be there
to carry us through the summer?

(09:04):
Yes, that's, that's, it's stilla question. I don't think
there's much worry about it fromthe dealers, from the dealers
that I'm talking to,but it is kind of like an
interesting stat, wild to see,though, and I'm we're seeing
this across a lot ofmanufacturers, where prices are
going up, manufacturers tryingto combat that to keep demand.
So it seems like themanufacturers are still flush

(09:25):
with some level of cash to beable to balance this. And maybe
they did well during the COVIDtimes to make sure that they
were flush with cash tomanufacture rebates and
incentives. So I think all ofthat kind of combined, there's
going to be this meet in themiddle, and then when you see
you know things like interestrate reductions happening at the
same time, that's going tobalance for monthly payments,

(09:45):
even if prices go up, I stillthink there might be, like, a
very small blip right at thebeginning of this thing, when
customers start to start to likethe fear of perception overcomes
reality and. And once thatflips, it'll be right back
if interest rates go down in ameaningful way, and people start
I mean, I guess it's the wholetheory behind, like, the

(10:07):
strategy right now to grow theeconomy and make everything
stronger as payment pressuresdecrease, even if prices
increase, the balance, I don'tknow, and I wouldn't expect,
doesn't surprise me when yousaid you haven't really heard
much from dealers on this rightnow? No, you know why we're in
the money right? Like, rightnow, when the showroom is
patents for you, like, I'llworry about that in I worry

(10:29):
about tomorrow, but I guaranteeyou, if that comes in two or
three months, it will be on thefront page of every Automotive
News oriented article. And we'llbe talking about it then, but
we'll deal with it then. Yeah,what are you gonna do now? What
do you honestly? What are yougonna do? You're just gonna,
like, focus on the cars today,focus on your people. And
speaking of focusing on yourpeople.

(10:51):
Hey, ran that through. There's anew Harvard study, they're smart
over there, that says the key tolowering retails, notoriously
high turnover, may be simplerthan we think. The answer invest
in frontline workers careergrowth and mentorship.
Researchers found that most lowwage workers actually want to
keep their jobs to avoiddisruptions in their lives,

(11:13):
especially once they'recomfortable with get this
they're co workers. Over 60%said they would stay with their
employer if they saw a real pathto advance, but with many
supervisors overseeing up to 20employees, personalized feedback
and coaching are becoming rare.
Employees often fear asking forpromotions or raisings, worried
it might cost them their jobs. Arelated McKinsey study also

(11:34):
showed career development wasthe top reason non managers
wanted to leave their advice andpower managers because their
impact cascades the wholeorganization. Some about, some
something, people, something,something people, right? Yeah,
I think, I mean, this is justwhen Harvard releases a study
showing it right. Everybodyleans in just a little bit more,

(11:57):
right? But the reality is, thetrue it's something we talk
about a lot in this industry,it's really the more than cars.
Mentality is that when you focuson the people, the people are
the catalyst, and thrivingpeople and thriving culture are
really where innovation thrives,are where customer experience
thrives, where retentionthrives. And you know, it's not
just these little improvementsand best practices that you can

(12:18):
do. This is the long game of themost successful businesses, and
the ones with that do the mostfor the community is that they
focused on mentorship. And Ican't think of another industry
that has so many areas ofmentorship built in than the
auto industry. People still messit up, but training is part of
the culture of automotive likefrom service to sales, and I

(12:39):
think if you just push thatdown. And like the great
organizations that we see, likebozart Ford and Bozar
University, when you push thattraining and that mentorship
down just the level, right?
Because, like when you havesales, you have sales, push it
down just a little bit to, youknow, lower, lower entry level
positions, to lot folks, toreceptionists, to all the people
that do these jobs, you unlock awhole pathway to people that are

(13:02):
going to get fired up about whatthey do, care about what they
do. And again, this industrylike they could definitely end
up as a manager, like relativelywell, and not just a manager,
but an owner. How many owneroperators do we know that came
from washing cars, legitimatelynot like they their daddy owned
the dealership, and they washcars. It's like, No, I started
washing cars now I own fivestores. Yeah, oh, yeah,

(13:27):
washing cars and so, doingnothing. Reality. Let me name
two of the biggest groups. Twoof the biggest groups that we
know. Of people started at entrylevel positions. Yeah? Greg
ceoca, there it is. Heard himsee, okay, they're in the top
150 they're in the top 50. Scottbueler, I mean, I think they
forgot to apply this year, sothey disappeared from the list.
And I think they're in the 20ssomewhere. Yeah, yeah. Like,

Paul J Daly (13:50):
there's nowhere else like it. Like

Unknown (13:52):
there's nowhere else like it. So if you're in
management and leadership oranything like that in the
industry, just recognize thatthat's the career growth
opportunity. So why wouldn't yougive that opportunity to every
single one of your employeesthat you possibly
can Well, we're gonna have someconversations around that as
well with a lot of people thatmaybe started at the bottom and
now they're here at ASOTU CONagain. Go to ASOTU CON com. Get
your tickets before prices go upon Sunday. We'll see you

(14:15):
tomorrow morning, Saturdaynight.