As President Donald Trump’s tariffs start to take effect, the auto industry is slashing its outlook for the year and experts anticipate existing car owners will look to buy now, pay later options to finance aftermarket vehicle products like accessories and services costs amid an uncertain economic environment.

“As tariff tensions continue to disrupt the U.S. auto supply chain and new vehicle sales remain sluggish, many consumers are holding onto older cars longer,” Srawesh Subba, practice director at consultancy Everest Group, told Bank Automation News.  

“This trend is putting pressure on household budgets as unexpected maintenance costs pile up, and it’s precisely where buy now, pay later (BNPL) is stepping in as a practical and increasingly popular financing option,” he added. 

READ MORE: Fintech integration fuels buy now, pay later trend

BNPL is already well established in retail and e-commerce and is now making inroads into the $200 billion auto aftermarket segment, Subba said. With new-car prices becoming elevated, the average American car getting old, this translates into more frequent, costlier repairs. 

Arad Levertov, chief executive of Sunbit, a pay-over-time provider for auto repairs and aftermarket sales, told BAN that the average vehicle on the road today is more than 12 years old. “Even before recent changes in the economic forecast for the country, we saw increasing demand” for pay over-time payment services, he said. 

25% tariffs 

The Trump administration imposed flat 25% tariffs on all imported vehicles on March 26.  

Since then, those tariffs have been paused as the administration looks for ways to minimize their impact on the auto industry, Bank Automation News’ sister publication, Auto Finance News, has reported.

Ford Motor Co., the largest auto manufacturer in the United States, expects its profits to fall by $1.5 billion in 2025, Chief Executive Jim Farley said during the company’s May 5 earnings call. And Farley expects tariffs to remain in place for at least three years, he told CNBC today, adding that an average Ford vehicle will cost $5,000 more after the imposed tariffs. 

The U.S. is expected to have 700,000 new car sales in 2025, according to an April 14 report by S&P Global, down from prior estimates of 1.3 million made before Trump’s global tariff imposition day on April 2, which he termed “Liberation Day.”  

Need for BNPL in auto aftermarket 

Sunbit teamed up with Ford in March to provide its payment services in 2,800 dealerships as an option for car servicing and parts, making Ford the 16th original equipment manufacturer to be added to Sunbit’s network, Levertov said. 

This makes sense to Terry O’Neil, head of connected commerce and strategic growth for Citi Retail Services.

“I do think that consumers will continue to be very budget conscious,” O’Neil told BAN. “We’ve continued to pulse our consumers and they’re continuing to look for payment flexibility and optionality.” 

If vendors can break down payments over time, consumers are more likely to make big purchases on their terms to manage their budgets, O’Neil said, adding that a changing demographic is also behind a rising adoption of BNPL services. 

Citi’s Flex Pay is offered via multiple merchants, including Honda Powersports dealers, and has seen consumers adopt it for post-sale purchases of accessories, O’Neil said. 

Merchants are integrating alternative payment methods and lending into their points of sale primarily to meet consumer demands and needs, O’Neil said. BNPL providers and banks alike are making it easier to onboard businesses that care about client sales conversion, he added. 

Citi can onboard clients within days by connecting their platforms via API, depending on the size of the merchant, and can make point-of-service lending decisions in a matter of seconds to reduce friction and increase sale conversions, O’Neil said. 

“Most dealerships, especially those with high service volume, are choosing to team up with established BNPL providers instead of developing in-house solutions,” Everest Group’s Subba said, adding that the plug-and-play aspect and compliance needs can easily be outsourced to the BNPL vendor.