There’s a murky picture of what lies ahead for auto retail in 2025 and you can’t believe everything you read
For as many years as I can remember, the dawn of a new year was normally greeted with much anticipation and excitement.
Customers and businesses alike were eager to see what the new year would bring. Plans were made, goals set, and tactics finalized.
The game plan was set, the teams prepared, ready and waiting at the starting gates to race forward with great expectations. A new season was dawning, and many predictions of winners, losers and improvers were made. Excitement reigned supreme.
The realities entering 2025 are fraught with great uncertainty and stress as businesses and their customers do not know what to expect from the New Year.
It’s like the world is seen through the eyes of “Mr. Magoo.”
So much of our thinking is driven by the media, both traditional and social. Virtually anyone has a voice, many without clearly seeing where they are going.
Customers and business owners must wade through the facts from the fiction, which happens to be indistinguishable in today’s multi-faceted communications world.
The problem is that our decisions are made in real-time, not in Lala time. As a result, perceived mistakes will be made, as the field of play is anything but stable.
Late 2024, we were injected with massive doses of political uncertainty in Canada, the United States and globally. Our provincial leaders as a result have stepped forward in an unusually aggressive fashion to speak out against some of the information that permeates our airwaves, print and online sources.
The macro-environment entering 2025 is anything but clear and the micro-environment is even foggier.
One thing is clear, Canada is at a political crossroads where leadership is being challenged and provincial protection is coming to the forefront.
Customers and business owners must wade through the various values and principles that could individually affect them. The macro-environment entering 2025 is anything but clear and the micro-environment is even foggier.
On the automotive front, many challenges carry forward from 2024 and could possibly manifest into greater challenges in 2025. The dependence of our industry’s relationship with our counterparts in the U.S. and Mexico is well documented.
From a manufacturing standpoint, our industry has developed to become a semi-seamless world powerhouse. All three countries benefit from that approach. The possibility that those relationships could become fragmented is of grave concern and has many far-reaching implications for all three countries, their businesses and customers.
As businesspeople, we strive to find stability. Stability in our dealerships, stability within the brands we represent and stability in the local business environment in which we operate it.
Going into 2025, that stability is being challenged. Where there are challenges, however, there are also opportunities. The opportunities may initially be hard to identify, but rest assured they are there.
Having said that, one of our most important skills moving forward is our ability to pivot. Much of the businesses that make up our dealerships will largely be business as usual. Vehicles will require maintenance and repair as usual. Selling of new vehicles will be business as usual. Used cars, however, could present some challenges.
The finance business will also be challenged as interest rates fluctuate. Consumers have faced headwinds these past few years, however, lower interest rates and higher wage settlements will be welcomed.
As I see things, the risks affecting our dealership are mainly uncontrollable. With the uncertainties and instability in many automotive-producing countries worldwide, it would be foolish to believe that all the brands we represent will be unaffected.
Parts suppliers, automotive manufacturers and assemblers, and their National Country Sales Distributors face various headwinds that will filter into the availability of their product portfolios. This will vary country by country and brand by brand. Our job, in an environment like this, is to execute basic blocking and tackling, stick to our processes and hold our heads strong with our loyal employees and local customers.
We must be ready to pivot quickly as the unknowns sporadically become knowns.
Communication becomes critical. Firstly, communication with our loyal employees. We must help them make sense of what they hear outside the dealership, help them separate fact from fiction and help them understand how they and our dealership will be affected.
Secondly, we must maintain contact with members of our brand dealer councils who represent us in discussions with our brands’ National Country Sales Distributor. Thirdly, we must communicate with our Provincial trade associations and encourage them, along with the Canadian Automobile Dealers Association to assist them in deploying their mandate.
2025 is shaping up to be a challenging year. The uncertainty presents many macro fears as to the impacts that could be possible. As business leaders, we must focus on the known, while remaining aware of the potential of the unknowns, as we march forward with our plans. We must be ready to pivot quickly as the unknowns sporadically become knowns.
I see much optimism for 2025 as our dealerships continue to perform as we know we are capable of. We must, however, keep our eyes on developments that could impact our used car and financing businesses.
Those two areas, I believe, are at the greatest risk. Another risk to be watchful for is the continued pressure from the brands we represent to have us continually invest in non-productive areas of our business.
I can appreciate there is a need for brand positioning in the markets; however, the extent of investment required by dealers should be carefully considered.
Another aspect that I expect will surface in 2025 is that of dealer succession. Dealerships have built significant wealth, and many Canadian dealers want to ensure that their family’s involvement continues.
Even with the focus of the past several years, however, many dealers are not prepared. I believe 2025 will be a tipping point, where dealing with dealer and management succession will be at the forefront. Perhaps taking some chips off the table or solidifying the current family ownership trajectory requires serious consideration in this coming year.
There is much to consider entering 2025. The “Mr. Magoo” challenge will not help things. As dealers, we must make the best decisions given the information we have. We must take care of the short term but keep our eyes on the medium to longer-term implications of some of the potential changes headed our way.
Our teams have never been more important than now.
