The Top 5 Automotive Predictions for 2025
What they are and the key actions Dealers should take for success and profitability
With 2024 in the rear-view mirror, it's time to look ahead at theTop 5 Predictions for the Automotive Industry in 2025and understand the critical actions dealers need to take to ensure increased success and profitability. Highlighted are what our expert Jade Terreberry, Senior Director of Strategic Planning at Autotrader and Kelley Blue Book and host of the UnJaded podcast believes you should be planning for, as well as steps you should take to make shifts to create opportunities to win customers, capture more incremental revenue and gain market share
Prediction #1: Post Election: Time to Move Forward
With the election season behind us, both franchise and independent dealers need to get off “ pause ” and shift gears and focus to growth. Historically, consumer sentiment often improves in the year following an election, and early signs suggest that 2025 could follow this trend
WHAT THE PREDICTION IS FOCUSED ON:
Economic Health:
The early signs are promising, with the economy responding favorably post-election. However, upcoming policy decisions on tariffs, emissions, and EV incentives will play a critical role in shaping the year ahead.
Tax Policy: By year end, we should have a clearer picture of how tax changes might impact both the industry and consumer spending in 2025 and beyond.
Consumer Confidence: When optimism rises, so does spending on big-ticket items like vehicles, creating opportunities for dealers to capitalize on the momentum.
Prediction #2: Vehicle Affordability: A Continued Focus
Affordability remains a pressing issue for both consumers and dealers Recent data highlights this ongoing challenge, with new-vehicle prices reaching $48,724 on average in November 2024. In 2025, we expect to see further shifts for dealerships to address affordability concerns, balancing cost pressures with consumer accessibility:
WHAT THE PREDICTION IS FOCUSED ON:
Lower Rates, More Options: Credit availability is expanding, offering more consumers viable financing solutions.
ACTIONS TO TAKE IN 2025:
Inventory Stability: Inventory levels are expected to hold steady or even grow, reducing some of the pricing pressure seen in recent years.
Rising MSRPs: With production costs climbing, manufacturers may continue to raise prices. Dealers will need to balance these increases with creative strategies to maintain consumer interest.
Prediction #3: Market Outlook: A Return to Normalcy
After years of uncertainty driven by supply chain disruptions and shifting consumer behavior, the sales forecast for 2025 shows promise, hinting to a return to traditional market dynamics This shift provides a foundation for dealers to focus on sustainable growth, while addressing the competitive pressures and evolving consumer expectations that continue to shape the industry
WHAT THE PREDICTION IS FOCUSED ON:
New Vehicle Market: Sales are projected to surpass 16 million units for the first time since 2019, driven by improved incentives and inventory levels.
Used and Wholesale: A strong year for used vehicles and a positive trend in the Manheim Index suggest steady demand, though tight wholesale inventories may continue to pose challenges.
Margins and Revenue: Continued margin compression will require dealers to lean on datadriven strategies to uncover incremental revenue opportunities and navigate competitive pressures.
Prediction #4: The EV Journey: An Evolving Landscape
Increasing global competition, policy-driven incentives, and advancements in technology are driving EV adoption at a rapid pace The transition to EVs will remain a defining trend in 2025 as the industry works to meet growing demand and navigate challenges
WHAT THE PREDICTION IS FOCUSED ON:
Global Influence:
Countries like China are setting benchmarks with policies to encourage EV adoption, such as government-driven incentives. The U.S. market may see increased competition as global automakers enter with affordable, high-quality models.
Expanded Options:
With more EVs and hybrids hitting the market, consumers will have greater variety but questions around infrastructure and tax incentives remain.
The Used EV Market: As the EV market matures, more used options will enter the mix, creating opportunities for dealers to connect with eco-conscious buyers.
BE a champion KNOW your customerEV adoption is not onesize-fits-all 1 2 3 ACTIONS TO TAKE IN 2025:
EDUCATE your sales consultants and get COMFORTABLE with products / charging
