Lessons from 2024: Trends Dealerships Can Leverage for a Successful 2025

New vehicle profits have fallen for nine quarters up to Q2 2024. This shows the need for new strategies. In the last 3.5 years, over 2,000 dealerships have been sold. This is nearly twice the usual rate.

The auto industry trends are changing, affecting how cars are sold. Looking back at 2024's lessons is crucial for success in 2025.

In Q2 2024, auto retailers made an average of $1,628 profit per used car. This was a slight increase from Q1 2024. Understanding these numbers, and the moves of big players like Lithia, helps guide future steps.

About 84 dealerships were sold in Q2 2024, showing a decrease after a busy Q1. Public companies, led by Lithia, greatly reduced their buying. Still, Lexus, Porsche, and Toyota dealerships keep their customers and profit well.

To do well in car sales in 2025, knowing these trends is key. The year 2024 has taught us how to adapt for a successful 2025 in the car world.

The Rise of Electric Vehicles (EVs)

The electric car market is growing fast, thanks to government help and more people wanting them. By the end of 2020, 6% of all cars sold globally were electric, a record number. In the U.S., sales of these cars jumped by nearly 200% from the second quarter of 2020 to the same period in 2021. This demand means car dealers are now focusing on offering more electric cars.

California is leading the way, with 42% of the U.S.'s electric car registrations in 2020. President Biden wants half of all new cars sold to be emission-free by 2030. To help reach this goal, the government might increase the tax credits for buying a new electric car to as much as $12,500.

$15 billion has been set aside to get more people to buy electric cars, plus an additional $7.5 billion to build more charging stations across the country. Currently, 13 states and Washington D.C. follow California's strict car emission rules, and 10 of these states are working hard to get more zero-emission cars on the road.

Moving from traditional cars to electric ones means we need more places to charge them. By 2030, electric cars may make up 53% of all car sales in the U.S. Experts think that around 2024 to 2026, electric cars will cost the same as traditional cars. That makes offering a wide range of electric cars even more important.

But electric cars tend to cost less to keep running than traditional cars. They usually cost about $5,000 to $10,000 more upfront. This could lead to more people leasing them or going for financing deals.

Car dealers also have to teach buyers about the perks and care of electric cars. A survey showed that many salespeople struggle to explain how owning an electric car can be cheaper over time. Even though many people buy cars online, 90% still visit dealerships to try them out or buy them. This shows how crucial it is for sales teams to know their stuff.

To succeed, car dealers should diversify their car options and adapt to these trends. Having a knowledgeable sales team and enough charging stations is vital.

Aspect	Details
Market Penetration	Global EV market penetration reached 6% by the end of 2020.
U.S. Sales Growth	EV sales in the U.S. increased nearly 200% from Q2 2020 to Q2 2021.
California Dominance	42% of all U.S. EV registrations in 2020 were in California.
Government Incentives	Proposed tax credits could increase from $7,500 to $12,500.
Charging Infrastructure	$7.5 billion allocated for constructing a nationwide EV charging network.
Market Projections	EV sales could comprise up to 53% of all passenger-car sales by 2030.

Digital Retailing Takes Center Stage

As more people buy cars online, dealerships need to quickly improve to stay in the race. Having a smooth, easy-to-use website is key. It helps show off cars and makes buying them online easier.

Virtual showrooms are changing the game. They use cool digital tools like augmented reality (AR) and videos that show the car from every angle. This lets customers check out cars without leaving home. It's a way to connect with them better and make shopping fun.

Dealerships should also add more electric vehicles (EVs) to their line-up. With EV sales expected to soar by 2025, this is vital. Government incentives and better batteries are causing this jump. So, having a strong online presence is crucial to attract more buyers.

Digital Tool	Benefit
Augmented Reality (AR)	Simulates in-person vehicle inspections.
360-Degree Videos	Provides comprehensive vehicle views.
User-Friendly Website	Streamlines the online buying process.
Virtual Showrooms	Enhances customer experience remotely.

In conclusion, using digital marketing and online selling tools is essential for dealerships. It not only boosts their online presence but also keeps them ahead in a digital world.

Subscription and Car-Sharing Models Gain Traction

The car market is changing fast. Subscription services and car-sharing are new ways for people to have cars without owning them. Dealerships should work with these services to meet people's needs for flexibility and convenience.

Adding short-term rentals and car-sharing to what dealers offer can bring in more customers. Telling customers about the perks and how these options work can change how they think about owning cars. This new direction fits today's trends and can make dealerships more money.

These new ways to have a car help dealers meet the wants of today's buyers. Here’s a table showing how traditional car ownership compares to subscription and car-sharing:

Aspect	Traditional Ownership	Subscription & Car-Sharing
Commitment	Long-term	Short-term/Flexible
Ownership	Full Ownership	Access without Ownership
Cost Structure	High Upfront Cost	Subscription Fee
Maintenance	Owner's Responsibility	Included in Service
Flexibility	Low	High

Dealers that team up with subscription services stay ahead in the market. This move meets what customers want today and gets dealers ready for the future of cars.

Sustainability as a Selling Point

In today's market, people care a lot about the environment. Automotive dealerships can draw in more customers by being more eco-friendly. One important step is to use Energy-Efficient Facilities to cut down on energy use and save money. These places are great for the environment and appeal to customers who like green businesses.

Starting recycling programs is another good move. It helps handle waste better and makes the dealership's work less harmful to the planet. Showing customers that you recycle can make your dealership more attractive. It shows you care about the environment.

A lot of dealers, 89% to be exact, feel positive about their business's future. To stay current with market trends, it's key for dealerships to follow green practices. These include making their places more energy-efficient, sticking to green rules, and always showing their dedication to being green.

Here's a look at how being sustainable could boost dealership performance:

Year	Performance Indicator	Projected Increase
2023	Customer Satisfaction	12%
2024	Sales Revenue	15%
2025	Green Brand Value	20%

With 25% of dealers planning to make their stores smaller, using space and resources wisely is very important. Being eco-friendly readies dealerships for what customers want. Also, offering things like specific services for electric vehicles and giving out lots of info can keep customers coming back. These steps are key in a good green plan.

Data-Driven Decision Making

Using analytics, dealerships can transform how they work, making sense of huge data amounts. They use Personalized Marketing to talk directly to customer likes, making them more interested and loyal.

Getting the inventory right is crucial. Dealerships use CRM tools to predict what and how much they should sell. This helps avoid too much old stock and increases sales speed. It means better profits and smoother operations.

Data helps make customer service better too. Looking at things like how fast dealers reply and how many leads buy, they can improve sales. With data, they also make recommendations that customers really like, making them come back more.

Metric	Description
Inventory Turnover	Measures how quickly vehicles are sold after arriving at the lot
Aging Inventory	Tracks how long vehicles remain unsold, highlighting models that may require promotions or discounts
Lead Response Time	Measures how quickly the team follows up with inquiries
Lead Conversion Rate	Tracks the percentage of leads that turn into buyers
Customer Satisfaction Score	Gauges customers’ satisfaction with their interactions at the dealership
Customer Retention Rate	Tracks how many customers return for additional purchases or services

Metrics like how much the service areas are used and if cars are fixed right away boost Customer Satisfaction. Busy service bays mean things are running well, and fixing things right the first time keeps customers happy and coming back.

Lastly, using data gives dealerships an edge. Those who adopt new tech and really target their marketing do better in making customers happy, running efficiently, and making more money.

After-Sales Services as a Revenue Driver

In today's car market, after-sales services are key for making more money at dealerships. They bring in about 40-50% of a dealership's total profit. Dealers hope to keep their earnings healthy, aiming for an 85-100% absorption ratio.

But, as we see more electric vehicles (EVs), dealers might earn 30-45% less from their workshops. They could also see a 20-30% drop in parts sales because EVs have fewer parts. This makes regular service visits important for a steady flow of money from maintenance work.

After-sales services make more money because of the high prices on labor, parts, and accessories. Good service advisors can make customers happier, leading to more sales. To measure success, dealers look at things like profit per repair, how well workers use their time, and the ratio of parts to labor.

A lot depends on making customers happy after they buy. About 45% might leave for another brand if service is bad. Happy customers can lead to half of all sales through good reviews. They're also worth 16% more over their lifetime, showing why good after-sales service matters so much.

Metric	Impact
Gross profit from after-sales	40-50%
Absorption ratio	85-100%
Decrease in workshop revenue due to EVs	30-45%
Reduction in parts trade	20-30%
Customer switching due to poor service	45%
Increase in sales from positive referrals	Up to 50%
Satisfied customer lifetime value increase	16%

By putting effort into after-sales services, dealerships can keep customers coming back and grow their profits. A strong after-sales program not only keeps money coming in but also builds better customer relationships. This paves the way for success in selling cars long-term.

The Role of Artificial Intelligence (AI) in Dealerships

Artificial Intelligence (AI) is changing the automotive sector, a huge $3 trillion industry in the United States. With 95% of dealers thinking AI is key for future success, its growth is expected. Now, over 80% of dealerships are either using AI or planning to start by 2025.

Chatbots for customer support and other AI technologies are making dealerships work better and earn more. Tools for predicting sales and setting the right prices are changing how dealerships sell, using data to reach out to customers in a personal way. A big 91% of dealers say AI is vital for understanding their data and talking to customers better.

Dealerships using AI have all seen their earnings go up in the last year. For 37% of them, profits grew by 20-30%. This shows that 72% of dealerships think AI helps their employees, not replaces them. It's about making jobs better, not taking them away.

The future looks bright, with 81% of dealerships planning to spend more on AI in 2025. They’re investing to stay competitive and improve how they serve customers. AI is making a big difference in many ways, like answering customer questions quickly, warning about car troubles before they happen, and understanding customer needs in real-time. The car industry is moving towards a smarter future with AI.

AI Impact on Revenue	Percentage of Dealerships
Revenue increase of 20-30%	37%
Revenue increase of 10-20%	19%
Revenue increase of 1-10%	26%
Revenue increase of over 30%	18%

AI's role in automotive dealerships is growing fast. It's making them more money and running smoother. Dealerships are using AI for better customer support, smarter sales tools, and pricing. This shows they’re ready for a future where tech and people work together to give great customer service.

Dealership success 2025

For dealerships to succeed in 2025, it's crucial to Embrace Emerging Technologies and put the customer first. The car industry is changing fast, with new tech like AI making a big difference. By 2024, 60% of companies will use AI, handling 40% of basic customer questions. And by 2025, 75% of businesses will use AI tools, with AI expected to take care of 80% of routine talks.

To keep up, businesses should use AI chatbots and CRM systems. This makes their work smoother and improves customer talks. Michael Michelli says using AI to understand customers and give them what they really want will set companies apart in 2025.

• Data Integration: It's vital to mix data from Dealer Management Systems (DMS) and Customer Relationship Management (CRM) systems. Doing this lets businesses offer personal touches based on full customer info.

• Customer Data Platforms (CDPs): Tools like Elevation by Edifice give instant updates on sales and how customers interact, helping dealerships spot chances to grow.

• Customer Experience: Investing in tech that customers interact with and focusing on making things personal are key for loyalty and beating competitors.

"The future of selling cars is all about data. Using CDPs for clear and useful data will help dealerships do well." – NADA Convention 2025

Using new tech not just makes dealership work smoother but also makes customers happier. By aiming for personalized, data-savvy talks, dealerships can stay ahead in 2025 and the years that follow.

Building a Strong Online Presence

In today's car market, having a strong online presence is key. 90% of car buyers look up information online before they go to a dealership. By using social media, dealerships can easily connect with people who might buy from them. By blending online and offline marketing, dealerships can make customers happier and more likely to buy, boosting the dealership's success.

For better visibility, strategic SEO and SEM are critical. Local SEO is super important because 76% of consumers visit a business within a day after a local search. A website that's optimized well can get up to 50% more organic traffic. This leads to more chances to sell and improves the customer experience. Also, personalized marketing can raise sales by 20%, showing the power of using data in strategies.

Content marketing brings in three times more leads than old methods. Using social media with great content can attract more visitors and create a devoted community. By 2025, it's more about meaningful engagement than just having lots of followers. Platforms like TikTok are becoming more popular because they mix learning and fun, keeping viewers interested.

For dealerships, having a clear marketing plan that works both online and offline can build trust and reduce confusion. This can lead to more people visiting the dealership. Also, focusing your marketing efforts can improve your ROI by up to 30%. Using a .dealer domain can make your dealership seem more trustworthy and easy to remember.

Strategy	Benefit
Leveraging Social Media	Connect with potential customers effectively
SEO/SEM	Improve visibility and organic traffic
Personalized Marketing	Enhance sales conversions by 20%
Content Marketing	Generate three times more leads than traditional methods
Dealer Domain	Enhance credibility and memorability
Consistent Promotions	Increase customer trust and foot traffic

By 2025, forum marketing is set to become more popular. Places like Reddit and Quora offer great ways to connect with specific groups of people. Presenting your brand as a helpful resource in these communities can greatly increase trust and loyalty. To sum up, growth depends on using social media well, smart SEO and SEM moves, and strong content marketing.

Conclusion

Looking forward to 2025, big changes are coming to cars and how we buy them. Electric cars are becoming more popular. Also, shopping for cars online and new ways to own cars, like subscription services, are changing the game. Dealerships need to plan carefully to take advantage of these trends.

It's smart for dealerships to focus on being green. This is not only good for the planet but also attracts customers who care about the environment. Using artificial intelligence (AI) and understanding customers better can help dealerships target their ads more effectively. This can lead to more people being interested and buying cars.

After-sales services are a key way for dealerships to make money. 85% of dealers believe that the parts and services they offer will be even more important in 2025. A good after-sales service and being easy to find online can help a dealership stand out. Using ads on platforms like Amazon DSP can also help.

To sum up, dealerships facing changes in the car market must use different strategies to succeed. They should analyze the competition carefully and always be open to learning new things. This way, they can do better than customers expect and keep growing their business successfully into 2025.

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Sean Cassy is a renowned automotive industry expert, marketing strategist, and writer with over 35 years of experience. As the co-founder of Turbo Marketing Solutions, Sean has been at the forefront of crafting effective marketing solutions for automotive dealerships across North America.

With a passion for the written word and an encyclopedic knowledge of the automotive world, Sean has written thousands of engaging blog posts, articles, and marketing pieces for dealerships representing all major brands. His work spans from luxury marques to domestic favorites and independent pre-owned dealers.

Over the course of his career, Sean's marketing strategies and content have helped generate over $2 billion in sales for his clients in the automotive retail space. He brings this wealth of expertise and industry insight to every piece he pens.

Through his new blog "Dealers and Drivers", Sean aims to provide a unique blend of automotive enthusiasm and industry analysis, drawing from his decades working with dealers while catering to the interests of car aficionados. Sean's writing offers readers an insider's perspective on the rapidly evolving automotive retail landscape.

Follow him on this exciting new journey exploring the intersection of automotive passion and the retail experience.

You can follow Sean on LinkedIn: https://www.linkedin.com/in/seancassy/ and on his website: https://www.seancassy.com