AUTO INDUSTRY DRIVING THROUGH UNCHARTED TERRITORY

By Byron Pope, Account/​Editorial Director

The U.S. auto industry is navigating a challenging landscape in 2025, with persistently high prices, tight inventory, and shifting consumer preferences. On top of these ongoing issues, sweeping tariffs on imported vehicles and auto parts are adding to the industry’s volatility.

New-Vehicle Market Changes Are Reshaping the Used Market

The dynamics of the new-vehicle market are directly influencing the used car sector in unprecedented ways. The supply chain disruptions of the past few years, coupled with automakers scaling back incentives and lease deals, have significantly impacted the availability of used vehicles. With fewer cars returning from lease, used car inventories remain tight, and prices continue to climb.

At the same time, new cars are getting more expensive due to rising production costs, higher interest rates, and now, newly imposed tariffs on imported vehicles and parts. Mexico and Canada, major suppliers of fully assembled vehicles and critical automotive components, are directly affected by these tariffs, leading to increased costs for automakers that inevitably get passed down to consumers. As a result, some buyers who would typically purchase new vehicles are turning to the used market, further driving up demand and competition.

Used Car Prices Remain High Amid Low Supply

Used vehicle prices also continue to increase. A major factor in this trend is the limited availability of used cars. With the number of vehicles coming off lease expected to drop 23% to a decade low in 2025, and many lease customers opting to keep their vehicles, supply shortages are expected to persist until at least 2027.

For dealers, the impact is clear: With fewer affordable used options, some consumers will consider new cars despite higher financing costs.

An Uber-Competitive Industry: Brand Awareness, Quality, and Cost Containment Are Key

The combination of high prices, shifting consumer preferences, and the new tariff landscape makes today’s automotive industry more competitive than ever. Automakers, new-car dealerships, and used-car retailers alike must sharpen their focus on brand awareness, brand image, and the overall quality of their vehicles to maintain a competitive edge.

Brand Awareness and Image: As consumers become more selective in their purchasing decisions, automakers and dealerships must reinforce their value propositions through effective branding and strategic messaging. A strong brand presence, bolstered by positive customer experiences, will help businesses retain loyalty and attract new buyers.

Vehicle Quality and Cost Containment: With affordability concerns rising, car manufacturers and dealerships must focus on providing durable, high-quality vehicles at competitive prices. Cost containment strategies – such as supply chain optimization, efficient manufacturing processes, and targeted pricing incentives – will be critical in maintaining profitability while appealing to budget-conscious buyers.

Looking Ahead

As we approach spring – traditionally a strong season for auto sales – prices may continue to rise, especially if supply remains constrained and new tariffs drive up costs further. For those considering a used EV, now may be a good time to buy, as increased supply and competitive pricing create more attractive options.

For automakers, dealerships, and suppliers, staying ahead in this fast-changing market requires a proactive approach to brand positioning, cost control, and consumer engagement. Those who continue to invest in strategic PR, marketing, and social media initiatives during this period of uncertainty will be best positioned to retain customer loyalty, protect sales, and emerge stronger as the automotive landscape evolves.

PR, Marketing, and Social Media: Essential Tools for Success

In this highly competitive environment, public relations, marketing, and social media efforts play a crucial role in shaping consumer perception and driving sales. Automakers and dealerships must invest in:

Thought Leadership and Media Engagement: Regularly engaging with industry publications, news outlets, and online platforms to showcase expertise and build credibility.

Targeted Digital Marketing Campaigns: Using data-driven strategies to reach specific customer segments with tailored messaging that highlights affordability, financing options, and vehicle benefits.

Social Media Presence: Platforms like Instagram, TikTok and YouTube are key to connecting with younger buyers, while LinkedIn and Facebook help maintain relationships with established customers.

Customer Reviews and Reputation Management: Ensuring a strong online reputation by encouraging satisfied customers to leave reviews and addressing concerns proactively.

Contact Byron Pope (bpope@​fwv-​us.​com) to learn how we can help.