By Jason Jordhamo, Director, Marketing, Polk Automotive Solutions

As the 2025 NADA Show in New Orleans approaches, original equipment manufacturers (OEMs) and dealers are facing twin pressures: rising vehicle inventory levels and a wave of new 2025 model launches. Automotive retailers and marketers must grasp these marketplace dynamics to manage existing inventory while establishing a pipeline for upcoming models.

The insights and solutions shared at NADA will be key for dealers looking to navigate this complex landscape successfully.

Rising inventory levels and upcoming launches bring challenges

During the last week of November, the available retail advertised inventory in the US climbed to 3.1 million vehicles, a 30% increase from the last week of December 2023. This trend shows that vehicle inventories have fully recovered from the semiconductor shortage two years ago, with surpluses returning to pre-pandemic levels. Available inventory has exceeded three million units for three consecutive months, and dealers must contend with vehicles remaining on lots for an average of 81 days.

Rising inventory levels cut across most manufacturers, but seven brands face more pressure to clear their lots. Cadillac, Ford, GMC, Honda, Hyundai, Kia and Land Rover are all experiencing inventory growth above 50% (Figure 1). Collectively, they have added more than 523,000 units and account for 73% of the total inventory increase in 2024.

And more inventory is on the way. More than 60 new vehicle launches are planned for 2025, including 27 battery electric vehicles from most of the industry's mainstream and luxury brands.

Dealerships and marketers must balance two priorities: attracting buyers to clear out existing stock, while building demand for incoming new vehicles.

Hybrid vehicles' continued momentum will help shape the 2025 market

Despite the challenges, dealerships and marketers can take advantage of market trends, including the growing popularity of hybrid vehicles. Hybrid electric vehicles are gaining traction, with their combined market share rising above 12% through the first nine months of 2024. In this electric vehicle-focused market, hybrid vehicles attract buyers by providing the benefits of electrification without the high costs or charging infrastructure challenges of fully electric cars.

Dealers can capitalize on the higher conquest rate of hybrid vehicles compared with cars using other fuel types. A recent S&P Global Mobility study found that hybrid customers from competing brands are more likely to switch than those using gasoline-fueled vehicles.

How automotive dealers and marketers can evolve their strategies to succeed

With higher supply and more options for alternative fuel types, consumers now have more control over the car buying process. Successful dealers will need to balance reducing current inventory while preparing for the new models.

This requires understanding local market dynamics—such as competitive dealer sales, popular models and patterns of customers switching between brands—to identify sales opportunities and address any gaps in strategy. Dealers using targeted marketing campaigns and smart pricing strategies will help to attract customers and boost sales.

The automotive landscape is evolving, and as the industry navigates these changes, staying informed about inventory trends, consumer preferences and mutually beneficial pricing for customers and dealers will be crucial for success in 2025.

Looking ahead: S&P Global Mobility at NADA

As we prepare for the NADA Show 2025 in New Orleans taking place Jan. 23-26, we're focused on helping car dealers accelerate their sales and grow their businesses in today's market.

At the S&P Global Mobility booth #3735, we will showcase innovative solutions designed to help dealers identify their best selling opportunities, reach in-market shoppers ready to buy now, and close the most profitable deals quickly, all while giving customers an optimal monthly payment option.

Meet us at NADA and learn how we can support your growth by:

• Identifying new opportunities: Market Impact helps dealers uncover sales opportunities for new and used vehicles. By providing insights into market share, customer loyalty and dealership performance, it empowers dealers to make informed decisions that uncover sales opportunities.
• Targeting the right audiences: With Polk Auto Direct, dealers can connect with high-value in-market shoppers. Featuring more than 1,000 segments tailored for dealer advertisers, the platform makes audience targeting easy, ensuring that your marketing efforts reach the right consumers.
• Optimizing sales processes: With Market Scan mDesking, dealers maximize profitability by accessing real-time data from multiple lenders. This helps reduce the time customers spend in the dealership by allowing the dealer to quickly present the best payment options, all while ensuring profitability.

We look forward to speaking with our customers and industry connections about how they can make the most of these solutions at NADA 2025! Attending NADA and interested to learn more?

Fill out this form to request a meeting

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.