An Optimistic Outlook for 2025

According to a survey conducted by Cox Automotive during the last quarter of 2024, most automotive dealerships are cautiously optimistic about 2025. Dealers gave their outlook on the future a score of 60, which, while it’s not an A+ rating, is up 14 points from the same time the previous year and marks the most optimistic dealers have felt since early 2022. If you haven’t been feeling too sunny about the year ahead, explore why your colleagues might change that.

Car Buyers Aren’t Waiting Anymore

Every primary political election causes a level of hesitancy for shoppers, especially for big-ticket items like a new vehicle. In June 2024, a Cox Automotive conducted a consumer survey indicated most shoppers expected the election results to cause significant changes in the economy, leading many consumers to adopt a wait-and-see approach to spending. Now that the election has concluded and the dust has settled, buyers have a clearer picture of what they can expect from policymakers over the next four years, allowing them to plan accordingly. The wait is over, and dealers will probably see a steady increase in the number of car buyers who are ready to make a purchase.

Lower Interest Rates

Both dealers and shoppers thought interest rates were tied to the election results. While the election results may not have been the direct cause, consumers welcomed a noticeable reduction in interest rates at the beginning of November. Combined with a .50% reduction from September, interest rates have dropped by a total of .75%, making the first decline in four years. The decrease in the federal benchmark will allow for more favorable auto loans, helping to get shoppers to the showroom in higher numbers.

Tax Rebates Stimulate Consumer Spending

In addition to lowered interest rates and a milder political climate, Jonathan Smoke, the Cox Automotive Chief Economist, attributed part of dealer optimism to the upcoming tax rebates. “The recent resolution of political uncertainty following the presidential election has cleared the path for a more optimistic outlook on future auto market conditions. Coupled with the potential for supportive measures such as tax rebates and the possibility of lower interest rates, dealers are feeling more hopeful about the road ahead as we move into 2025,” he said. In fact, compared to just a few months earlier in July 2024, significantly more dealers felt that several of these factors were having the opposite effect on their profits.

As we begin a new year with a strong outlook, Strong Automotive is here to help dealerships capitalize on all the positive changes the year brings with tailored marketing strategies.