Halfway through the year, Automotive Ventures founder Steve Greenfield sat down with Paul Daly and Kyle Mountsier to grade his own predictions. The four trends he covered aren't separate storylines. Dealer profitability is being squeezed from every direction that matters, and the squeeze is accelerating.
🎙️ Want the full conversation?
Listen to the complete midyear check-in with Steve Greenfield on today's Automotive State of the Union for the full context and every prediction we didn't have room for here.
Affordability Has Split Into Two Markets
New vehicle prices have crept into the $53,000 to $54,000 range, and Greenfield doesn't think that's a temporary blip. He describes it as a K-shaped recovery.
"If you're in the top 10%, you have no problem buying new cars," Greenfield said. "But new cars are now an affluent person's vehicle, and everyone else is buying used."
That split matters more than the average price tag does. A shopper today has often already decided which market they're shopping in before they've said a word to your team.
For dealers, that means the conversation with a walk-in can't assume they're choosing between trims. Increasingly, they're choosing between new and used first.
Tariffs and China Are the Same Pressure, From Two Directions
OEMs largely absorbed tariff costs last year rather than pass them on. Greenfield expects that to change.
"I suspect MSRP inflation will slowly creep up," he said, "because OEMs will tactfully, but slowly, feed more of the tariff-related pressure through to the consumer."
At the same time, Chinese manufacturers are squeezing legacy automakers internationally, especially in Europe. As OEMs retrench abroad, the pressure lands here too.
"If your automaker isn't healthy and they're getting squeezed, front-end grosses are getting back to pre-COVID normals," Greenfield said. "Dealers are going to have to ask, where am I going to make money? Used cars, the back end of the deal, fixed ops."
If margin on the front of the deal keeps compressing, the money has to be made somewhere else. Greenfield's read is blunt: dealers who haven't already started thinking about cost structure are already behind.
