Automotive Remarketing Trade: 8 Traits to Look ahead to 2025 – FleetTakes
Jeremy Robb of Cox Automotive (talking) identified that prime rates of interest and inflation are making a deeper divide between high- and low-income patrons.
The 2025 Convention of Automotive Remarketing (CAR), held March 18-20 in San Diego, yearly brings collectively consignors, auctions, sellers, and remarketing corporations to debate the state of automotive remarketing and the automotive market generally.
I used to be solely in a position to attend on Wednesday, however from the periods I attended, I gleaned a bunch of tendencies within the shifting financial situations, affordability challenges, fleet gross sales, and EV remarketing challenges within the used automobile panorama.
Listed here are eight takeaways shaping the business proper now.
A Wave of Off-Lease EVs is Coming — Is the Market Prepared?
The used EV market is about to expertise a surge, pushed by excessive lease charges since 2023 and expiring federal incentives. “Six p.c of all lease returns in 2025 will probably be battery-electric or plug-in hybrid. Subsequent yr, that jumps to 14%,” stated Scott Case, CEO of Recurrent.
Many of those EV leases had been closely backed underneath Inflation Discount Act (IRA) incentives, which implies unique lessees paid considerably lower than market charges. As these automobiles flood the used market, their battery situation will outweigh mileage as the important thing resale issue.
“Battery well being is the brand new odometer in EV remarketing,” Case added, emphasizing that patrons are prioritizing battery diagnostics over mileage when evaluating used EVs.
Remarketers and sellers should present battery situation reviews at resale, or they threat an absence of purchaser confidence within the rising EV secondary market.
Car Affordability Is a Rising Concern
Rising rates of interest, inflation, and better month-to-month funds are pricing out many shoppers, but demand stays robust. “Rates of interest on used automobile loans are the very best they’ve been in 25 years. Affordability is the paramount situation,” stated Jeremy Robb lead economist for Manheim at Cox Automotive.
The common month-to-month automobile fee is now $756, up from $590 simply 5 years in the past, making new and used automobiles much less accessible. Customers are holding onto their automobiles longer, lowering turnover within the used market and protecting provide tight.
The market continues to point out a Ok-shaped restoration, the place luxurious and high-end automobiles are promoting, however lower-income patrons battle to seek out reasonably priced choices. “December was a robust month for brand new automobile gross sales, however we noticed a shocking drop in February,” stated Eric Lyman, vice chairman at Black Guide.
As extra patrons return to market with unfavorable fairness of their trade-ins, pricing stress on the used automobile phase will intensify.
Used Automotive Costs Are Falling, However Stay Traditionally Excessive
Whereas the post-pandemic used automobile value bubble is deflating, values are nonetheless properly above pre-COVID ranges. “Used automobile retention is 28% above 2020 tendencies however anticipated to say no by one other 15% within the subsequent 18 months,” stated Forrest Dougan of Openlane.
Sellers are additionally seeing shrinking earnings on each new and used automobiles. On new automobiles, seller earnings are projected to fall from $2,300 per automobile in 2024 to $1,700 in 2025, in line with knowledge introduced by Dave Sargent of J.D. Energy.
“Extra high-interest-rate patrons are coming again to market with no fairness of their trade-ins,” stated Sargent. “It will put further stress on used costs and affordability.”
Whereas seller earnings have declined, retail costs stay excessive resulting from ongoing provide constraints. An absence of lease returns is additional tightening provide, with shortages anticipated by means of 2026-2027.
Though used automobile costs will decline, persistent provide limitations will forestall a dramatic drop.
EV Adoption Slowing Regardless of Extra Fashions on the Market
Regardless of a rising number of EV fashions, gross sales development has flattened not too long ago. “There are extra EVs available on the market than ever, however demand isn’t rising as quick as anticipated,” stated Sargent.
Whereas 36 new EV fashions launched prior to now two years, demand stays concentrated in just a few key states, equivalent to Colorado, Texas, Florida, and New York. Surprisingly, EV gross sales in California really declined year-over-year.
Charging infrastructure stays a serious concern for potential EV patrons. “A surprising 19% of public chargers had been reported as nonfunctional when EV house owners tried to make use of them,” Sargent added. With lower than 25% of shoppers saying they’re “very seemingly” to purchase an EV subsequent, confidence available in the market stays shaky.
Issues about battery degradation and long-term possession prices proceed to discourage patrons. “Used EV patrons are terrified of battery well being as a result of they don’t have expertise with it. They fear an EV will die like an previous iPhone,” stated Case.
With out enhancements in charging infrastructure and battery transparency, shopper confidence in used EVs will stay low.
Tariffs Would Disrupt Each New and Used Car Pricing
The potential for 25% tariffs on imported automobiles and elements might shrink new automobile gross sales by 2.3 million models. “Tariffs will create ripple results throughout the business. Even when a automobile isn’t immediately impacted, automakers will shift pricing methods, and that may have an effect on each new and used stock,” stated John Coles, VP of knowledge science and Analytics at ACV Auctions.
Among the many manufacturers most uncovered to import tariffs are:
- Toyota (48% of U.S. gross sales from imports)
- Chevrolet (58%)
- Hyundai (66%)
Reasonably than simply elevating costs on tariffed fashions, automakers are anticipated to unfold the prices throughout their total lineup, making even U.S.-built automobiles costlier.
Increased new automobile costs might inflate used automobile values, disrupting depreciation tendencies and pushing extra patrons into the used market.
Rental Fleets Need Extra Autos, However Provide is Tight
Rental automobile corporations are desirous to refresh growing old fleets, however competitors with retail patrons is limiting entry. “Fleet patrons need extra automobiles to refresh their growing old stock, however they’re competing with retail patrons, making it tough to safe provide,” stated Robb.
With rental fleets holding onto automobiles longer, high-mileage models have gotten extra frequent at public sale. Whereas new automobile incentives will assist, provide constraints will hold fleet gross sales under pre-pandemic ranges for the foreseeable future.
EV Remarketing Requires a New Strategy
Conventional Licensed Pre-Owned (CPO) methods don’t work for EVs — battery situation is now extra essential than beauty repairs. “Confidence in battery life will decide if EV remarketing succeeds or fails,” stated Case.
To achieve the used EV market, auctions and sellers should provide:
- Battery situation reviews for used EVs
- New CPO applications specializing in battery well being somewhat than mileage
- Schooling for patrons on vary expectations and battery efficiency
“The used EV market will solely develop if shoppers belief that batteries will final,” Case emphasised.
Market at Crossroads
The remarketing business is at a crossroads, balancing affordability issues, EV adoption struggles, coverage shifts, and evolving shopper expectations.
Affordability points will persist, however the used automobile market stays resilient. EV remarketing should evolve with higher diagnostics and shopper schooling. Tariffs and financial uncertainty might create additional volatility in each new and used automobile pricing.
Sellers, fleet operators, remarketers, and consignors of every type should adapt now to remain forward of those market shifts.
