GDP’s in Reverse: What Q1’s Flatline Means for the Automotive Industry
The Forecasts Are In
Buckle up — because if you thought the first quarter felt weird… it’s because it was.
Preliminary numbers are rolling in, and they’re not inspiring confidence. Depending on who you ask Bank of America, Goldman Sachs, or the Atlanta Fed — Q1 GDP growth is somewhere between “basically flat” and “we’re already in a ditch.”
Let’s break it down like we would a slow sales Saturday:
The Forecasts Are In:
BofA says we’ll eke out +0.4% growth, thanks mostly to businesses front-loading inventory before tariffs. Not exactly a win.
Goldman Sachs actually downgraded their view this week, now calling for -0.2%.
And the Atlanta Fed’s GDPNow? Buckle up: they’re forecasting -2.5% growth. That’s not a typo. The alternative model (which adjusts for weird stuff like gold imports) still shows -0.4%.
Call it what you want stall, slowdown, soft patch the reality is the same: economic momentum is sputtering.
What’s This Mean for Dealers?
If you run a store, lead a sales team, or manage service lanes, you’ve probably already felt this in Q1.
Traffic slowed down.
Lead quality softened.
Appointments started flaking.
And grosses… well, they weren’t what they used to be.
The data now just confirms what we’ve been living.
And if you're in the luxury segment? The impact's delayed but it's coming. When the broader market sneezes, luxury coughs six months later.
The Real Culprit? Inventory Whiplash & Import Surge
The GDP drag came largely from imports surging, not because people were buying but because businesses were stocking up before the tariff hikes hit. That’s not demand-driven growth; that’s panic-loading pallets while you still can.
On the auto side, this shows up in:
Stuffed lots with aging inventory
Manufacturers pushing volume at the wrong time
And a recon pipeline that’s moving slower than it should
If your recon center’s feeling overwhelmed, you're not alone. But the problem isn't just internal. It’s the entire supply chain preparing for a costlier second half.
What To Watch Next
If Q1 was a flatline, Q2 better come in with a defibrillator. Otherwise:
Consumer confidence may cool, especially if interest rates don’t budge.
Used car demand could retreat, especially if the Fed doesn’t make a move by summer.
Tariffs and election noise will make planning past June an educated guess at best.
What To Do Right Now
Lean into efficiency. You won’t control the economy, but you can control how fast you process trades, how tight your inventory sits, and how much money dies in recon.
Dial your marketing in. Don’t chase volume. Chase value. Highlight payment options, certified peace of mind, and service perks.
Train your people. Slowdowns expose the weak. Sharpen the team — especially on lease retention, service drive sales, and digital response time.
Protect your PVR. Discounting out of panic is how you go broke in a slowdown. Hold your margin, add value, and close with confidence.
Bottom Line:
GDP might be down, but your store doesn’t have to be. The difference will come down to leadership, speed, and focus.
If you found this helpful, I write weekly insights like this for Automotive Risk — no fluff, no filler, just the stuff dealership leaders need to stay sharp.
🔹 Bank of America (BofA)
“We expect 1Q advance GDP to print at a weak 0.4% q/q saar, largely on the back of an import surge driven by front loading ahead of the tariffs...”
Source: Bank of America Global Research, U.S. Economic Weekly, April 17, 2025
🔹 Goldman Sachs
“We lowered our Q1 GDP tracking estimate by 0.3pp to -0.2% (q/q saar).”
Source: Goldman Sachs U.S. Economics Analyst, April 24, 2025 update
🔹 Atlanta Fed GDPNow
“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in Q1 2025 is -2.5% as of April 24, down from -2.2% on April 17...”
Alternative model (adjusted for gold trade): -0.4%
Source: Federal Reserve Bank of Atlanta – GDPNow Model