Used vehicle prices expected to continue to stabilize in 2025 after pandemic volatility
In 2025, used vehicle prices are expected to stabilize due to improved new car production, easing supply chain disruptions, and increased availability of semiconductors. These factors will boost new vehicle inventories, reducing pressure on the used car market. Additionally, easing inflation and potential interest rate cuts are likely to enhance consumer purchasing power, making financing more affordable and influencing demand across the automotive market. As competition in the electric vehicle (EV) sector intensifies and consumer preferences shift toward fuel-efficient and eco-friendly options, prices for traditional combustion engine vehicles may decline, further balancing the market. Together, these economic and market dynamics are poised to create a more stable pricing environment for used vehicles.
Some years just come with more excitement than others and that is the case for the ADS team as we gear up for what is sure to be our best year ever!
By most expert opinions, the automotive industry, and the economy, should thrive in 2025 (see articles below) and we are right with them in that mindset. The majority for automotive forecasters are predicting an increase over 2024 as well as the downward move on rates, lower overall vehicle prices and the return of some needed factory incentives all line up to give this market the accelerant it needs to achieve the results we are all hoping for.
The recent news of the Honda and Nissan merger is adding even more excitement to the conversation and outlook. Many feel this will add competitiveness on a global level and several dealers of ours have expressed shear enthusiasm over the news. It will be interesting to see how this news shakes out and what the short and long-term effects are on the industry and the dealers of the affected brands.
Our team at ADS continues to grow. We added 5 incredibly talented members to our team in December and look forward to introducing them to everyone in the next couple of months. We know these recent hires, as well as our existing team members, will bring us to new heights in terms of dealer performance, new relationships, and new markets entered. Be on the lookout for the exciting updates throughout the year.
From all of us at ADS, to all of you, we wish you the happiest and most prosperous New Year’s EVER!
Thankful and Grateful is a good way to express our feelings as we head into the holiday season and begin to wrap up this year.
For us at ADS, it has been a topsy turvy year with some ups and downs. Fortunately, there have been more ups than downs. As our industry continues to evolve, so must our team. We are blessed to be welcoming so many high caliber individuals to our team over the next few weeks. We know the changes we are making will result in the continuation of our exponential growth for many years to come.
One item we are very excited about, is the addition of our Risk Management Team. This team, led by industry veteran, Dave Ditgen will be bringing our strong independent mindset and approach to the risk management side of the business. When it comes to your garage keepers, open lot, general liability and workers compensation we know we can provide unique solutions that fit your needs. Please fill out the contact from below to get in touch with one of our licensed team members to get you introduced to the process and programs we have access to.
For all of those that have blessed us this year by doing business with us, supporting us as we continue to grow, or challenging us to get better, we thank you. We are grateful for every step in our journey and couldn’t be more excited about what next year and beyond have in store for us.
It is that time of year for all of us to go out and perform our civic duty by voting. Taking part in our democracy is a gift, and unfortunately, many Americans do not take part for a variety of reasons. These elections should remind us of those who have made the ultimate sacrifice defending our democracy, and therefore our ability to take part in free and fair elections. Please visit https://vote.gov/ to make sure you know how and where to vote in your state.
Many of us are excited for the elections to be over. If you live in a swing state, we are certain you are tired if seeing attack ad, after attack ad. Another reason to be excited about November 5th being behind us is that the economy, specifically retails sales, generally hit a stagnant period around elections. The majority in our industry are optimistic about the increase in sales volume we should see post-election cycle.
For most dealers, 2024 has proven to be a difficult year. Sales volume, and gross profit have declined especially within certain manufactures. As some dealers feel pressure on volume and profit, their focus has shifted to F&I and fixed ops. We at ADS have stepped up and responded to the challenge. Our dealers are experiencing strong, if not record F&I results and our roll-out of Repaired Forever has proven to help drive additional service sales and an added profit center.
Moving into the holidays, let us reflect on what we are thankful for and what the holiday season means to each of us.
First and foremost, our thoughts and prayers go out to all those affected by last weeks storms in the Southeast. We sincerely hope everyone finds a way to safely navigate through the aftermath. Please take a moment to click the link below to donate to a relief fund to provide aid to those in need.
Trick or Treat?
That is the question most of us in the industry are asking ourselves about what the next few months of this year have in store for us.
Here are just a few of the bigger questions out there…
Will the interest rate cuts accelerate, or slow car sales? Will the election breed confidence or fear into the markets? Will the juxtaposition on EV’s cause more manufactures to transition away from the segment? Will the market look more reasonable in terms of Blue Sky in 2025? What is the turnaround time for Stellantis?
All of these are good, legitimate questions and depending on how they are answered could drastically change how the industry’s future unfolds.
As our team crisscrosses the country speaking with dealers and other industry leaders, one thing we have learned for sure; we are past the COVID days of volume and profits. Dealers are working to find new ways to add gross profit, new ways to compete for customers, and new ways to train (and in some cases, retrain) their staff. The good news is, we at ADS have the solutions.
Even though the industry has seen decreases in F&I profitability, our dealers are still holding strong, and even seeing increases. Our dealers are adding Repaired Forever (see below) as a new profit center to their dealerships, and are utilizing ADS and its decades of retail experience to help their teams continue to grow and thrive!
We kicked August off by celebrating our 10-year anniversary in grand fashion. A party appropriate for a decades long run of exceeding our dealer’s goals and objectives. As we rolled through the month, we highlighted each our associates who are the ones who make it happen day in and day out. Please check out our LinkedIn page to read up on each of our team members to get to know them better. Also, be on the lookout for an announcement of our newest team members later this month.
Now we turn our attention to the next decade and beyond, and what better time to discuss the advantages of working with a truly independent advocate for your business. According to recent publications, inventory levels are up 43%, F&I profits are down 23%, and the market is showing signs of getting more and more difficult as we move into 2025.
Dealer after dealer has told us how their current provider is letting them down, allowing results to suffer, not minding the profitability of their participation structures, and basically just operating on cruise control. The old way of working with dealers, and taking advantage of relationships, is no longer acceptable. There is a better way.
As we continue to work with a growing number of dealers, we are seeing the results of our comprehensive approach to improve F&I sales and profitability and can proudly say that our stores are bucking the industry trends of going backwards. We have many dealers, and dealer groups setting F&I records due to our unique sales process, and our integrated levels of accountability. To find our more, please reach out to us to see if there are F&I profits being left on the table at your store.
August is a big month for us here at Advanced Dealer Solutions, as we are celebrating our 10-year anniversary!
In 2014, Bob felt dealers needed an independent advocate working tirelessly on their behalf. Not just with income development, but claims management, loss ratios, reinsurance results, capital to fund acquisitions, and so on. Dealers didn’t need another person working for vertically integrated company, somebody reporting up to a private equity firm, or someone being mandated sales goals from a corporate tower. Dealers needed an unbiased company whose primary goals were to exceed the dealer’s goals and objectives.
That independent, unbiased spirit remains at the core of who we are and what we do. We work for our dealers, PERIOD! Throughout these past 10 years, we have achieved tremendous success in collaboration with our dealers and product partners, more than most people could have imagined.
Although we may be celebrating our 10-year anniversary, we are just getting started and I assure you, you ain’t seen nothing yet!
A Message From The ADS Team We hope you all had a fantastic Memorial Day Weekend and found time to enjoy the sun, lake, pool, or BBQ with friends and family. Equally, we sincerely hope the tragic storms that wreaked havoc across the country over the last couple weeks steered clear of you, your families and your dealerships.
This is always an exciting time of year for the ADS team. As the country celebrates the unofficial start to summer, we celebrate the official start to prime selling season for the dealers we are fortunate to work with and support. By all accounts, sales, as a whole, continue to meet or exceed expectations. Although many prognosticators predicted the downfall in F&I performance during the post COVID era, we at ADS, are honored to say our stores are holding pace, and even setting new records in PVR and PPRU. There are many contributing factors to this, but the basis is our incredibly talented team, our unique F&I sales process, and the support and accountability we provide our stores. If you are interested in learning how to improve your F&I process, profitability, reinsurance performance, etc. please contact us to see if we are the fit you are looking for.
Electric vehicle (EV) sales growth in the U.S. continues to slow, according to sales data analyzed by Kelley Blue Book. In the first quarter of 2024, Americans bought 268,909 new electric vehicles, according to Kelley Blue Book counts. EV share of total new-vehicle sales in Q1 was 7.3%, a decrease from Q4 2023.
While annual EV sales continue to grow in the U.S. market, the growth rate has slowed notably. Sales in Q1 rose 2.6% year over year, but fell 15.2% compared to Q4 2023. The increase last quarter was well below the previous two years.
In Q1 2023, EV sales volumes were up 46.4% year over year and 15.5% quarter over quarter. In Q1 2022, EV sales were higher by 81.2% year over year and 20.4% higher than the previous quarter.
“Electric vehicle sales in the U.S. declined during Q1 2024 – the first quarter-over-quarter downturn since Q2 2020,” said Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive.
“As anticipated, Tesla’s sales took a hit, influencing the overall market dynamics. However, a few brands saw significant EV sales increases, achieving over 50% year-over-year growth. As noted in January, we are calling 2024, ‘the Year of More’. More new products, more incentives, more inventory, more leasing and more infrastructure will drive EV sales higher this year. Even so, we’ll continue to see ups and downs as the industry moves towards electrification.”
Analysts at Cox Automotive had expected a slowdown in EV sales growth. Segment growth typically slows as volume increases. This is certainly true with the market leader Tesla, which reported notably lower global deliveries in Q1 2024.
According to Kelley Blue Book estimates, Tesla sales in the U.S. were down 13.3% year over year – well below the typical double-digit growth that had become routine with the Tesla brand. Tesla’s share of the electric vehicle market in Q1 2024 was 51.3%, down from 61.7% one year earlier.
Though the overall year-over-year growth was minimal in Q1, nine manufacturers recorded more than 50% year-over-year growth in EV sales – BMW, Cadillac, Ford, Hyundai, Kia, Lexus, Mercedes, Rivian and Vinfast.
Q1 2024 EV SHARE OF TOTAL BRAND SALES
Notably, lower prices have supported EV sales volume in the U.S., particularly for key Tesla models. The average transaction price for a new EV in Q1 was $55,167, a 9.0% decrease compared to Q1 2023 and down 3.8% quarter over quarter. Tesla’s average transaction price was $52,315 in Q1, down roughly 13.5% year over year. However, lower prices did not generate higher volume.
Many automakers have followed Tesla’s lead and slashed prices. Incentive spending on EVs has increased notably in the past year, another sign of slowing demand. Leasing, too, has increased. In Q1, roughly 27% of all EVs were leased, more than double from the year before. With leasing, many buyers can qualify for the full $7,500 incentive the Inflation Reduction Act offers.
One bright spot in Q1: Strong EV sales from luxury makers, suggesting the EV market continues to be luxury-driven. Cadillac achieved a 499.2% year-over-year increase in electric vehicle sales due to robust sales of its Lyriq model. At Mercedes, EV sales were up 66.9%. BMW posted a 62.6% increase in EV sales compared to Q1 2023. At Audi, Q1 EV sales grew 28.8% year over year.
Meanwhile, sales of the most affordable EV in the U.S. – the Chevy Bolt – have been temporarily halted. Bolt sales fell 64.3% year over year in Q1, hitting just 7,040, as production stopped. A new version of the Bolt is expected to launch in 2025. On the non-luxury side, Ford achieved an 86.1% year-over-year increase in Q1 EV sales with the second-highest EV sales volume behind Tesla.
Cox Automotive forecasts EV sales in the U.S. to increase year over year in 2024, making this year the best year ever for EV sales. Analysts expect EV sales to reach roughly 10% of the market by the end of the year, up from 7.3% in the first quarter.
Stellantis NV sales dropped 10% in the first quarter compared to last year, with its Ram and Dodge brands suffering the steepest sales declines.
The transatlantic automaker, which also offers Chrysler, Jeep, Fiat and Alfa Romeo in the United States, sold 332,540 vehicles in the first three months of the year compared to 368,327 a year ago. Bright spots were Jeep, which saw a 2% uptick due to several popular vehicles including its plug-in hybrids, as well as a 9% rise for Chrysler sales thanks to its Pacifica minivan.
“As Jeep prepares to deliver its first fully electric vehicle, the Jeep Wagoneer S, in the U.S. in the second quarter, the brand saw significant growth across its portfolio in Q1, and the Jeep Wrangler 4xe and the Jeep Grand Cherokee 4xe are currently ranked the No. 1 and No. 2 best-selling hybrids in the country,” Jason Stoicevich, Stellantis head of U.S. sales, said in a statement. “2024 will be a transformative year for the company and our consumers, and our focus and commitment remain on delivering best-in-class products across Stellantis’ diverse portfolio.”
The sales drop-off was in contrast to most other automakers, which reported strong year-over-year sales increases this week. However, General Motors Co., Kia Corp. and Tesla Inc. had declines. GM reported a sales drop of 1.5% year-over-year to 594,233 in the first quarter.
In the first quarter of 2023, Stellantis also witnessed a 9% decline in sales. For all of 2023, however, it saw just a 1% sales decline in the United States compared to 2022.
Stellantis highlighted the healthy sales of its plug-in hybrids for the quarter, which increased 82%. The automaker noted that its Jeep Wrangler 4xe, Jeep Grand Cherokee 4xe, Dodge Hornet R/T and Chrysler Pacifica Hybrid took four of the five top spots for best-selling hybrids in the country as of last year. The company is getting set to launch eight fully battery-powered vehicles in the United States by the end of 2024.
Jeep’s sales were positive thanks to healthy sales of its Compass, Renegade, Wagoneer and Grand Wagoneer. Sales of the popular Grand Cherokee and Wrangler models were about flat.
Ram saw steep sales declines, including of its ProMaster vans, but noted the 2025 Ram 1500 is arriving at dealerships now. Dodge saw sales declines of its Charger and Challenger — which ended production last year — and Durango SUV, though it is releasing an all-new electrified Charger in the coming months.
