The automotive industry is navigating a turbulent market, with tight used-car supply, rebounding new-vehicle stocks, and electric vehicles (EVs) reshaping strategies.
Stream Companies’ experts Steve Sexton, EVP of Agency Growth, and Don Williams, VP of OEM Partnerships, share insights into what original equipment manufacturers (OEMs) are doing to rebalance inventory and how dealerships can capitalize on these shifts to drive sales.
Navigating Market Challenges
Used-car supply is constrained, with trade-ins averaging 7.6 years old—the highest since 2019—pushing the average price of a three-year-old vehicle to $30,522, up 2.3% year-over-year.
“We’re seeing a used-car market where supply isn’t keeping up with demand,” Sexton says. Vehicles lingered on lots for 38 days in early 2025, the slowest pace since 2021, reflecting cautious buyers.
New-vehicle inventory reached an 81-day supply in Q4 2024, matching pre-pandemic levels. Brand imbalances also complicate matters: Subaru, Audi, and Acura see month-over-month increases, while Buick and Volvo face declines, likely due to tariffs, according to Williams. Toyota and Lexus maintain leaner stocks, but Stellantis, Nissan, and Volvo deal with overstock. Growing EV inventory, with expiring federal tax credits, adds urgency to move these vehicles.
What OEMs Are Doing
OEMs are tackling inventory challenges strategically. “Many are freezing prices for the next few months to offset tariff concerns and boost short-term sales,” Williams explains.
They’re expanding certified pre-owned (CPO) programs to move used inventory, leveraging digital tools and AI pricing to optimize offers, and using “galley lists” to provide stackable incentives like loyalty cash, conquest offers, and lease pull-ahead deals. These efforts aim to clear lots while addressing consumer hesitancy, giving dealerships tools to drive sales.
Actionable Strategies for Dealerships
Dealerships must act decisively to turn these market shifts into opportunities. “Dealers that see this as an opportunity, not a setback, are the ones that succeed,” Sexton emphasizes.
Here’s how dealerships can stay competitive:
Promote large quantities of rear trim levels and models with standout features. “You’ve got to showcase what sets your inventory apart,” Williams says. Highlighting unique benefits can move units faster.
Target existing customers, especially those with vehicles over two years old visiting for service. “We need to understand what our current customer base is doing,” Sexton advises. Use proactive car-buying offers, six-month lease pull-ahead options, and stackable incentives like OEM rebates or conquest cash to drive trade-ins and sales.
A Customer Data Platform (CDP) is critical, but activation is everything. “It’s like having a Ferrari with no wheels if you don’t act on that data,” Williams quips. AI-driven marketing through email, phone, social posts, and direct mail can pinpoint in-market customers and protect your base. Stream’s Retail Ready platform, which posts offers within four hours, helps dealerships gain 25% more time in-market.
“When my wife shops, she wants to see specials with a lease payment or she’s not even going to consider you,” Sexton notes, stressing the need to meet consumers on their terms.
A streamlined sales process is foundational. “It’s shocking how inconsistent responses can be,” Sexton says, recalling his recent EV purchase. Dealerships must optimize Business Development Center (BDC) processes for personalized, direct replies to inquiries.
For EVs, education is key. “Dealers focused on education are seeing success,” Sexton says. Highlight 35- to 40-mile average commutes and promote tax credits or free charging to ease range anxiety. Stackable offers can “bury negative equity,” making EVs appealing for customers with upside-down loans.
Planning is a common weak spot. “Most dealers don’t have a long-term marketing plan, and by long-term, I mean 90 days,” Williams observes.
Align campaigns with events like back-to-school or holidays to gain an edge. “How are we marketing? What does this look like?” Williams asks, urging dealers to plan and measure success.
Lifecycle management ties it together. “How do we do the best with what we have? How can we be the first to market?” Sexton asks. Fixed operations can also transition service customers with high repair bills into new vehicles, boosting sales and satisfaction.
Driving Success in 2025
The industry’s resilience is a strength. “The fact that it bounces back consistently is a great sign,” Sexton says. By leveraging data, targeting customers, and staying proactive, dealerships can thrive. “It’s about being proactive and staying ahead of the curve,” Williams concludes.
For deeper strategies to navigate inventory recovery, watch Stream Companies’ Inventory Recovery Webinar at https://www.streamcompanies.com/webinar/inventoryrecovery/.