“I hate to say I told you so,” has to be up there with the awful “It is what it is” when it comes to the lexicon of the most annoying phrases ever.
So I’m not going to worry about it either. But I’d like to ask you to revisit my 2024 predictions, published this time last year, when I used some guesswork about what might happen in the auto business this year.
I was right that Cazoo would disappear for good and that more and more manufacturers would abandon agency sales, but I was wrong in my prediction that Vertu would finally go public. That’s always what this year is for.
So, as is now tradition, and with 2025 already underway, here’s what I think could happen in the next twelve months.
We will see dealer failures
I’m sorry to start off on such a negative note, but it’s a topic that has been worrying me for a while. We have seen some disastrous results for 2023 and from what I hear 2024 has been even worse for many car dealers. A combination of high interest rates, ongoing concerns about the cost of living and brands phishing hard-to-sell electric cars has left many dealers in hot water. I have a terrible feeling that a lot of this is going to be unsustainable and that we are going to see some failures this year.
We keep bumping along
From the conversations I’ve had and the expert reports I’ve seen, there’s little to suggest that 2025 will be a ballistic change in the fortunes of the auto business. There is steady demand in the market for new and used cars, but with little evidence of interest rates falling anytime soon and a stagnant economy thanks to a poorly received budget, I don’t see any upside in the car market.
The ZEV mandate will be reexamined…
Finally, the government is consulting the sector on what needs to change to stimulate demand for electric vehicles. The damage the ill-conceived concept has done has been seen by forcing automakers to make unsustainable discounts on electric cars to stimulate demand. If I were a betting man, I’d bet on the government relaxing the percentage targets for the number of electric cars each car brand must sell in the coming years.
…and we are given a number of incentives to drive electric
Together with the reconsideration of the ZEV, I think we will finally see the government stepping up to encourage the public to drive electric. Consumers need a carrot to make the switch and we’ve seen car buyers in the second-hand market, where the price is the same, willing to give EV a try. We need some decent incentives to do that in the new car market as well. What would I do? I would generate demand with a scrappage scheme for the worst polluting older ICE cars if buyers went electric and reintroduced the plug-in car subsidy. I’m sure the extra VAT receipts alone would be enough.
Used car prices will remain fairly static
There’s no doubt that used car prices are still quite high, but I don’t see that changing anytime soon. We’re in the middle of the decline in fewer cars sold during the Covid years, which means there are fewer used models floating around the system. Demand is also quite static, as most used car buyers buy out of necessity rather than desire, so I’m sure all of this will mean used car prices will remain fairly static. Expect another year or small percentage declines in line with normal seasonal trends.
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