What Does the Auto Market Look Like Heading Into 2025?

If you’re looking at new or used cars as 2024 winds down, it’s a good idea to take into account the trends going into 2025.

Interest rates are likely to start falling by the middle of September and that trend should continue into 2025. More incentives are likely to be available by the end of the year as well. Although 2024 has been a buyer’s market, should you wait until 2025 to buy?

Low APR Offers and Lease Deals Dominate New Cars

Those in the market for a new car are likely in luck as 2024 winds down. New car inventory is higher than average with 80 to 90 days of supply at many dealerships. With only four months left in the year, the urgency to sell will be high. Interest rates are still high, but automakers are countering with attractive offers and lease deals. The 2025 models are arriving, but 80% of the new car inventory are 2024 models. The end of the year could be an ideal opportunity to get a great deal on outgoing models.

Used Car Market Picture Is Less Clear

Buyers looking at used cars have a more complicated picture to consider. Used car prices have been going down slowly over the last few months. Prices are falling even faster at the wholesale auctions where dealerships buy used cars. If you have a trade-in, that’s bad news, but if you’re looking for a used car, it’s a good trend. The new car incentives mentioned above are also pulling buyers out of the used car market, which theoretically should drive used car prices even lower. Now is a good time to buy a used car, but 2025 might be an even better time to buy if you can wait.

EV Sales Stay Put

By 2025, EV sales should account for 10% of all new car sales according to Bloomberg New Energy Finance. By 2040, EV sales are expected to account for over half of all new car sales. Despite this rapid growth, the amount of EV models on the road is likely to remain only 8% by 2030. However, by the end of the ’30s, over 30% of cars on the road are likely to be EV models. This growth expectation is largely resting on regulatory requirements by various countries. If those change, the growth rate may also change.

Significant Transformation In Progress

The auto industry is on the border of a significant transformation going into 2025. Economic factors, buyer preferences, and evolving technology are all having an impact. Evolving technology is probably the most significant factor illustrated by increased EV sales and a shift toward semi-autonomous driving. More consumers are seeking out vehicles with advanced tech features as well. On the other hand, the market faces sobering economic difficulties like rising insurance costs, fluctuating fuel prices, and high interest rates.

The car market in 2025 will reflect the condition of the economy, changing buyer preferences, and an increase in technology. Regulatory changes may have an effect as well.