Shares of Asbury Automotive Group (ABG) plummeted 5.41% in Wednesday's trading session, as investors reacted to the company's first-quarter earnings report and growing concerns about potential tariffs in the auto industry.

During the Q1 2025 earnings call, Asbury's management highlighted several challenges faced by the company. CEO David Hult noted that weather-related issues impacted performance in various markets, including Georgia, the Carolinas, Indiana, St. Louis, and Northern Florida. The company also took a cautious approach to vehicle sales, focusing on maintaining gross profit rather than chasing volume in light of potential tariff impacts.

While Asbury reported growth in its parts and service business, with same-store gross profit up 5% for the quarter, investors seemed more concerned about the uncertain outlook. The company expressed caution regarding the potential impact of tariffs on the auto industry, which could affect vehicle pricing and demand. Management indicated that approximately 56% of their new vehicle units sold in Q1 were produced in America, which could provide some insulation from tariff effects, but uncertainty remains for the rest of their inventory.

Adding to investor concerns, Jefferies cut its target price for Asbury from $280 to $245, further pressuring the stock. The lower price target likely reflects the challenging operating environment and potential headwinds facing the company.

Despite the negative market reaction, Asbury's management remained optimistic about long-term prospects, highlighting the pending acquisition of Herb Chambers Automotive Group and ongoing implementation of the Tekion dealership management system. However, the company acknowledged that predicting key metrics like sales volumes and gross profit per unit would be challenging in the current environment.

As Asbury navigates these uncertain waters, investors will be closely watching how the company manages potential tariff impacts and capitalizes on its strategic initiatives to drive future growth.