What Are the Top 5 Challenges Facing the Car Dealership Industry in 2025?
As written for The Safe Driver.
There have been many times in the past 100+ years when the car dealership industry can be said to have been in a state of flux. Often, that was because of emerging technology. If the technology is moving rapidly, then it follows that the salespeople need to stay on top of it so that they can keep the would-be customers better informed.
In 2025, you can always contact an automotive digital marketing agency if you own or operate a car dealership and feel that you are falling behind your competitors. In addition, though, you should have a basic understanding of the fundamental challenges facing this industry now that we are a quarter of the way through the current century.
We will talk about five of those challenges in the following article.
The Electric Vehicle Conundrum
In many ways, electric vehicles (EVs) seem like a godsend. In theory, they are great for the environment. If more individuals and families buy them, it’s likely to cut down on pollution quite a bit.
However, there are some questions that go along with EVs, at least so far as the car-buying public is concerned. If someone wishes to buy a new vehicle, and they’re thinking about purchasing an EV, car dealership employees need to become adept at selling them. This usually involves becoming knowledgeable about these types of vehicles and being able to talk about them in a positive light.
While it seems like that would be easy, some dealerships report that their employees are having trouble with it. Often, that seems to be because it’s hard to win over some older individuals who aren’t sold yet on the efficacy of fully electric cars.
Maybe, as this new technology becomes more prevalent in society, this will not be as much of an issue. At the moment, though, some salespeople are finding it necessary to work twice as hard to convince would-be car-buyers that pulling the trigger and getting their first electric vehicle is a prudent idea.
The Digital Car-Buying Experience
It’s also worth mentioning that more and more individuals are looking to buy cars online these days rather than in person. It makes sense, to some degree. If you could sit on your couch at home and buy the car you wanted on your smartphone, why would you bother going to a dealership?
Physical car dealerships normally have salespeople on staff who work on commission. How does it make sense to give such a salesperson a commission if someone bought a car online instead of having this individual assist them in person?
Each dealership has to figure out how to navigate this issue. Many of them are trying to make the in-person car-buying experience as pleasant and desirable as possible, though that’s somewhat challenging as well.
Economic Uncertainty
Economic uncertainty is definitely a factor that car dealerships find themselves confronting in 2025. Since the current administration took over, there have been conflicting economic messages. This has led to stock market disruptions and a general sense of buyer unease.
Someone who’s not sure whether they could be laid off or whether their hours at work might be cut is much less likely to buy a car, especially not a brand-new one. They may decide to keep the vehicle they have now, even if it’s not in such great condition.
Many individuals have spoken about a desire to get as much use out of their older vehicles as possible. It can be very hard for car dealerships to get past this mindset, but they have to come up with ways to do it if they hope to hit their sales quotas.
Tariffs
The tariffs imposed by the current administration are another source of consternation for some car dealerships, their owners, and their employees. If tariffs are imposed on certain car parts that are coming into the country, then that will drive up the overall price tag of a new car, as these costs are passed on to the consumer. This must happen out of necessity if the dealerships are going to make a profit.
However, there doesn’t seem to be any long-term consistency with the tariffs. If the policies surrounding them are continually changing, that’s another situation where it’s going to cause a general sense of economic unease.
If an individual is looking to buy a car, but the price of the particular model that they’re targeting keeps fluctuating wildly because of tariffs, then they’re likely to wait out this period of uncertainty. However, it’s far from certain how long the economic volatility will last. It’s another reason why more individuals are waiting longer to potentially purchase new cars, even if they would like to do so because they have a rapidly aging model.
Longer Vehicle Lifespans
There’s also the question of longer vehicle lifespans. Many vehicles are simply lasting longer these days. It’s something consumer’s demand.
Because of this, someone who in the past might have swapped out their old car for a new one every 5-10 years may try to get 15-20 years out of it instead. They don’t need to change the oil as often, and the hybrid and electric models that are currently flooding the market tend to last far longer than the old gas-powered cars did.
Models by Toyota, Honda, Kia, and others can easily stay on the road for 20 years or more. This means the likelihood of the drivers of one of these wanting to swap it out for a new one is miniscule, especially if they have stagnant wages. New inventory is rapidly piling up at many dealerships, with sales numbers falling lower and lower with each passing quarter.
It’s not all doom and gloom, though. The automotive industry has weathered challenges before, and doubtless it will get through this period as well.
There are always going to be some well-heeled customers who want the in-person car-buying experience. Many of them are also more willing to purchase new cars every couple of years just to show them off.