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JP Morgan Downgrades Auto Trading Platforms Amid Tariff Impact (Mar 28, 2025)
created At: 3/31/2025
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Fact
JP Morgan downgraded key auto trading platforms: -Openlane (KAR): Overweight → Neutral -CarGurus (CARG): Overweight → Neutral -TrueCar (TRUE): Neutral → Underweight -ACV Auctions (ACVA): Maintains Overweight 25% tariff could raise ATP by $4,000–$5,300 and monthly payments by 9–12%. Medium-term risks include weaker affordability and rising parts costs.
Opinion
JP Morgan sees the tariffs as a structural headwind for auto platforms, likely eroding profitability and dampening investment appeal across the auto trading sector.
Core Sell Point
The 25% tariff is expected to significantly slow the growth of vehicle trading platforms, intensifying concerns over declining investor sentiment toward the sector.

JP Morgan has downgraded several U.S. vehicle trading platforms, citing the negative effects of the Biden administration's newly implemented 25% import tariffs on vehicles and auto parts. The investment bank warned that prolonged supply disruptions and higher selling prices are likely to weigh on overall auto sales.

Specifically, JP Morgan:

  • Cut Openlane (KAR) and CarGurus (CARG) from Overweight to Neutral, and

  • Lowered TrueCar (TRUE) from Neutral to Underweight.

For KAR, delayed recovery in lease expirations is a key concern. CARG faces the risk of slowing price momentum, while TRUE could suffer from potential delays in OEM partnerships and product adoption.

JP Morgan estimates that the average transaction price (ATP) for vehicles could rise by $4,000 to $5,300 due to the tariffs, pushing monthly payments up by 9–12%. While the bank acknowledges that short-term shortages might boost used car demand and prices, it believes that, over the medium term, affordability constraints and rising parts costs could drag demand lower.

However, JP Morgan maintained an Overweight rating on ACV Auctions (ACVA), citing its lower exposure to consumer-to-dealer (C2D) sales and structural growth potential in the dealer-to-dealer (D2D) marketplace.



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