Market Insight: 2025 Predictions For The Automotive Sector

Published by One Auto API on

A business professional holds a crystal ball displaying vibrant data graphs, symbolising future predictions and analytics.

One Auto API CEO Mark Fretwell dusts down the crystal ball and takes a look at how the next 12 months could unfold in automotive.

As 2024 draws to a close, the automotive industry stands on the brink of significant transformation. 

Shifting market dynamics, advancing technologies and economic pressures are set to challenge businesses but they also bring new opportunities for those prepared to adapt. 

In this evolving environment, resilience and strategic planning will define success.

Whether navigating fluctuations in new and used car markets, addressing cost pressures or leveraging technology for operational efficiency, 2025 promises to be a year of both challenges and breakthroughs for dealerships and tech providers alike.

A Resilient Used Car Market

We’ve seen an earlier-than-usual slowdown in the used car market towards the end of 2024, but we anticipate a resilient rebound in the new year.

As consumer confidence stabilises amidst easing economic uncertainties, we expect demand for affordable, reliable vehicles to rise. 

For dealerships, this will create the need to refine sourcing and pricing strategies that cater to evolving customer expectations and fundamental changes in used car supply.

Technology and data will continue to be critical to unlocking the full potential of a dynamic used car market. 

Businesses that succeed will have technology that can pinpoint emerging trends with precision, optimise their inventory in response and deliver on price optimisation to gain a significant competitive advantage. 

Efficiency Takes the Spotlight

Cost pressures, especially those driven by changes to Employer National Insurance contributions, are set to weigh heavily on dealerships in 2025. 

With payroll costs set to rise by as much as £2,000 per employee, many businesses are reassessing their workforce strategies. Scrutinising payroll costs hand-in-hand with prioritising efficiency gains will mitigate financial pressures without compromising on performance.

Crucially, improvements don’t always require complex new systems and the adoption of new leading edge technologies. A fresh look at existing processes will always identify new opportunities that can  yield significant results. 

For example, outdated customer and vehicle records are a persistent issue for many dealerships, leading to inefficiencies in marketing and call centre operations. Implementing a real-time data cleansing strategy can lead to efficiency improvements of 20-25% in outbound campaigns,  creating additional capacity by eliminating waste and directly increasing revenue. 

If you look closely at your business you will find many such opportunities for process improvement, often with modest financial investment.

Navigating the Electric Future

The journey towards electrification will remain a central theme in 2025, with the reinstated 2030 ban on new combustion engine vehicles and Zero Emission Vehicle (ZEV) mandate targets in play. 

Fleet adoption of EVs continues to grow steadily, but retail uptake has been much slower, held back by challenges like range anxiety, upfront costs, and limited charging infrastructure.

Dealerships must take proactive steps to tackle these issues head on. It is not enough to wait for others to provide solutions. 

Transparent communication about EV ownership costs and benefits is essential, but hands-on experiences, like extended test drives or using EVs as courtesy cars, can be even more persuasive. 

Yet, the crystal ball for EVs is clouded by uncertainty around ZEV mandates. 

The government’s fast-track review has been welcomed, but the eventual outcome remains unclear. Will adjustments to the fines system or manufacturer credit structures provide relief? 

Dealerships must remain agile, ready to adapt their strategies as policies evolve. 

Could January bring a flood of ICE vehicles currently delayed at ports, leading to pre-registrations?

Only time will tell.

Responding to Regulatory Changes

The regulatory landscape in 2025 could become more intricate, with significant implications for motor finance. 

The recent UK Court of Appeal ruling requires car dealers, as credit brokers, to disclose commissions received from lenders. While this move has heralded immediate changes and greater transparency, it also placed additional compliance burdens on lenders, brokers and dealerships and added friction to the sales process. 

The risks of non-compliance are substantial, and no-one is willing to take unnecessary chances.

Another regulatory change set to affect the new car market involves the taxation of double cab pickups. From April 2025, these vehicles will no longer qualify as commercial vehicles, changing their tax treatment significantly. 

This shift could push some to extend  leases or delay fleet disposals to maximise their tax position, and those who do elect to change will inevitably be looking toward different categories of vehicle – with SUVs potentially benefiting.

Technology as a Crystal Ball Enabler

While regulatory changes and market pressures loom large, technology will remain the great enabler for the automotive sector in 2025. 

Businesses investing in data-driven technology and process innovation will reap the dual rewards of reduced cost and increased revenue. For instance, automated lead handling and nurturing can increase conversion rates by enabling sales teams to focus on the customers most likely to convert and the parts of the sales process where they can add most value, whilst increasing service levels for customers.  

The potential of technology goes beyond problem-solving – it also drives growth. 

Now is the time to streamline online bookings, improve communications and take advantage of automations to maximise workshop utilisation, and turn service departments into efficiency powerhouses. 

With new retail car sales under pressure, optimising other profit centres will be a top priority for dealer groups over the next 12 months.

The Road Ahead

The automotive industry must balance the immediate challenges of rising costs and regulatory pressures with the longer-term goal of transformation through investment. 

Those businesses that embrace technology, optimise operations, and remain proactive in the face of change will emerge as leaders. 

Whether it’s leveraging the resilience of the used car market, driving EV adoption, or adapting to new regulations, the road ahead offers opportunities for innovation and growth but to take advantage requires agility, focus and adaptability.

At One Auto API, we’re proud to support automotive businesses in navigating these complexities and, we are here to help you adapt, thrive, and lead in 2025 and beyond.

Here to Help

The future is uncertain, but preparation is everything. At One Auto API, we offer the tools and insights you need to stay ahead. Book a free 30-minute consultation today and discover how we can help you prepare your business for the challenges and opportunities of 2025.

Categories: Blog