Dealers Should Know What Consumers Think They Know

February 09, 2025

The Gist

Consumers are coming in with half-truths and headlines, and it’s your job to set the record straight. Here’s what’s really happening:

  • New car inventory is up, but high payments keep buyers hesitant.

  • Used car prices are stabilizing— but demand could spike again soon.

  • Dealer profits are dipping, but we’re nowhere near a crisis.

  • Tariffs might jack up prices, but nothing’s set in stone yet.

  • Car insurance is squeezing budgets, affecting affordability.

  • Wildfires in California will tighten used car supply.

Stay informed, stay calm, and guide customers through the noise.

Dealers Should Know What Consumers Think They Know

2025 is shaping up to be the year of customer confusion. Between shifting inventory levels, rising insurance rates, and the ever-looming possibility of tariffs, buyers are coming into dealerships armed with half-truths, headlines, and that one article their uncle sent them.

Your job? Be the cool head in the room. Here’s what consumers think they know—and what you actually need to know to handle their concerns.

“Isn’t it a buyer’s market now?”

Consumers have been hearing that new car inventory is back—and they’re not wrong.

  • New car supply has surged, especially for sub-$30K models. Last year saw a 64% increase in affordable new vehicle inventory.

  • Days-to-sell varies wildly. Some models (like the Toyota Camry Hybrid) fly off lots in 15 days, while others (hello, Dodge Challenger) sit for 186 days.

Reality check:

  • Yes, there’s more inventory, and incentives are creeping back up. But with 62% of buyers paying over $600 per month and a third of them shelling out $800+, affordability remains a serious hurdle.

“We are seeing better inventory and deals than in recent years, but the market is still adjusting. The right deal depends on the right car, and we can help you find what makes sense for your budget.”

“Used cars are getting cheaper, right?”

Well… not exactly.

  • Used car supply is shrinking. Inventory for 0-6-year-old vehicles is down 7%, meaning the price dips we saw in 2024 may reverse in 2025.

  • Used EVs are the exception. With supply up 35% and Tesla values plunging 25%, there are deals to be had—but mostly in the electric segment.

  • Wholesale prices just ticked up. The Manheim Used Vehicle Value Index (MUVVI) rose 0.8% in January, meaning dealers are already paying more.

Reality check:

  • Yes, used car prices came down in 2024, but demand is creeping back up. Spring tax refund season could send prices even higher.

"We’ve seen some price drops, especially on older models and EVs, but the market is still moving. If you're looking for a great deal, now is a smart time to shop before demand picks up."

“I heard dealer profits are crashing.”

This one’s got some truth to it—but context is key.

  • Dealer profits are expected to drop from $28B in 2024 to $22B in 2025—but that’s still way higher than pre-pandemic levels.

  • Incentives are back. The average is expected to rise to $4,000 per vehicle (up from $2,900 last year), but that doesn’t mean dealers are “desperate.”

  • Younger buyers are disappearing. Those under 35 made up just 17.6% of sales in 2024, three points lower than before the pandemic.

Reality check:

  • Margins are getting tighter, but this isn’t 2008. Dealers are adjusting to a new normal—higher volume, smaller profits per unit.

"The market is leveling out after the past few wild years. There are definitely deals out there, but pricing depends on demand and inventory. Let’s find something that works for you."

“Are car prices about to skyrocket because of tariffs?”

Maybe. Maybe not. But consumers are already nervous.

  • Trump has proposed a 25% tariff on Mexican and Canadian imports. That could mean a $2,700 price hike per vehicle if it goes through.

  • Even U.S.-made cars could get hit. Many parts still come from outside the country.

  • The industry hasn’t priced this in yet. If tariffs take effect, expect higher costs and possible delays as manufacturers scramble to adjust.

Reality check:

  • Nothing is final yet. But if it happens, expect an inventory shuffle, price hikes, and some serious consumer confusion.

"Tariffs could impact prices, but nothing has changed yet. If you’re looking to buy, locking in today’s prices before any decisions are made might be a smart move."

“Why is my car insurance getting so expensive?”

This one’s completely legit.

  • Insurance rates have jumped 42% since 2022 and are projected to rise another 5% in 2025.

  • States like New York and Florida could see double-digit hikes.

  • Weather disasters, inflation, and rising repair costs are the main culprits.

Reality check:

  • This is a major affordability factor that dealers can’t control—but it’s worth addressing.

"We know rising insurance costs are tough. If monthly payments are a concern, we can help find a vehicle that balances affordability with lower insurance rates."

“Will the California wildfires make used cars more expensive?”

Yes. And not just in California.

  • Thousands of vehicles were lost, and residents are flooding the market looking for replacements.

  • Similar disasters (like Hurricane Sandy) pushed used car prices up nationwide.

  • Major automakers are offering relief programs, but demand will still spike.

Reality check:

  • If you’re shopping for a used car, expect pricing to tighten in coming months.

"We’re already seeing increased demand in certain areas. If you’re thinking about buying, locking in a price sooner rather than later might save you money."

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