The smarter vehicles get, the more refined or “interconnected” future changes in automobile technology will be. By 2030, up to 90% of new cars are anticipated to have built-in connectivity, which will fundamentally transform production. By that year, McKinsey predicts that 95% of new cars will have advanced connectivity.
But beyond that, what will the market look like? What tech are dealerships looking for? Here’s a quick overview of the automotive industry trends and how to prepare.
Five Expectations for the Automotive Markets in 2025
1. AI Will Continue to Revolutionize The Automotive Industry
As the world embraces artificial intelligence (AI), its potential to revolutionize business operations is becoming more apparent than ever. AI promises enhanced data analysis, improved customer experiences, automated business processes, and streamlined decision-making.
Although the automotive industry has historically been slower in adopting new technologies, it is quickly changing its course. According to Lotlinx data research, 100% of dealerships implementing AI reported increased revenue over the past year. With 81% of dealerships planning to increase their AI budgets for 2025, the industry acknowledges that AI adoption is unavoidable and crucial for future business success.
AI is improving dealership revenue and enhancing customer relationship management, fraud detection, inventory management, and overall business performance. As AI continues to advance, its integration into car dealerships’ daily operations will become a key driver of growth and competitiveness.
2. Big Data Analytics Will Drive Sales
In 2025, advanced data analytics will be pivotal in driving dealership success. With big data, dealerships can gain insights into customer behavior, market trends, and sales performance. This technology allows dealerships to make data-driven decisions, optimize marketing strategies, and enhance operational efficiency.
For example, dealerships can analyze sales data to identify the most popular vehicle models, predict future demand, and adjust inventory accordingly. Additionally, data analytics can help dealerships understand customer preferences and tailor their marketing efforts to target specific segments, ultimately increasing sales and profitability.
3. Connectivity is Stronger Than Ever
As the world moves towards a more interconnected future, connected car technology will become increasingly vital for dealerships. Built-in connectivity enables vehicles to communicate with each other and external systems, providing real-time data on vehicle performance, traffic conditions, and more.
Connected car technology offers numerous benefits for dealerships, including the ability to monitor vehicle health, predict maintenance needs, and offer personalized services to customers. By integrating connected car technology into their operations, dealerships can enhance customer satisfaction and loyalty.
4. VR and AR Will Belong in All Showrooms
Virtual and augmented reality (VR/AR) technologies are set to revolutionize the car buying experience. These immersive technologies allow customers to explore and customize vehicles in a virtual environment, providing a realistic and engaging experience.
Dealerships can use VR/AR to offer virtual test drives, showcase different vehicle models and configurations, and even provide virtual tours of their showrooms. By incorporating VR/AR into their sales processes, dealerships can attract tech-savvy customers and create a unique, interactive buying experience.
5. Blockchain Tech Will Upgrade Supply Chains
Blockchain technology is emerging as a powerful tool for improving supply chain transparency and efficiency. In the automotive industry, blockchain can track the journey of vehicle components from manufacturers to dealerships, ensuring authenticity and reducing the risk of counterfeit parts.
This technology provides a secure, immutable record of transactions, which can help dealerships build trust with customers and suppliers. Additionally, blockchain can streamline processes such as financing and warranty claims, reducing administrative costs and enhancing operational efficiency.
Electric Vehicles (EVs) are Here to Stay
With the increasing demand for electric vehicles (EVs), dealerships must prepare to support this growing market. Investing in EV infrastructure, such as charging stations and service facilities, is essential for meeting customer needs and staying competitive.
Dealerships can partner with EV manufacturers to offer comprehensive sales and service packages, including home charging solutions and battery maintenance. By providing robust support for EV customers and driving long-term growth, dealerships can tap into this expanding market.
Cybersecurity is Ramping Up
As dealerships adopt more digital tools and technologies, cybersecurity becomes even more important. Protecting customer data and ensuring secure transactions are critical for maintaining trust and compliance with regulations.
Dealerships can protect their systems and data by enacting advanced cybersecurity measures such as encryption, multi-factor authentication, and real-time threat monitoring. By prioritizing cybersecurity, dealerships can protect their customers and businesses from cyber threats.
Inventory Management Platforms Become a Staple
Inventory management platforms are quickly becoming essential tools for car dealerships. These platforms empower dealerships to streamline operations, lower costs, and boost sales. With data-driven insights, dealerships can optimize inventory levels, accelerate sales turnover, and enhance overall profitability.
Our recent survey of auto dealers revealed that those using inventory management platforms reported a significant reduction in inventory days on lot, often by 7-10 days. Also, these dealerships experienced an average increase of $350 in profit per vehicle sold.
A substantial majority of dealers surveyed (79.61%) have allocated a budget for AI implementation in 2025, with a strong focus on inventory management, customer behavior analytics, and advanced pricing algorithms. This indicates a growing recognition of the potential benefits that AI-powered inventory management can bring to the automotive industry.
For example, our survey found that nearly 20% of dealers are already using AI for inventory management and pricing optimization. Many dealers are also interested in using AI for customer behavior analytics and advanced pricing algorithms.
Sustainable Practices
Sustainability is becoming a key focus in the automotive industry, and dealerships can play a significant role in promoting eco-friendly practices. Sustainable practices such as energy-efficient lighting, recycling programs, and eco-friendly vehicle options can attract environmentally conscious customers and lower operational costs. Dealerships can also partner with organizations that promote sustainability to enhance their corporate social responsibility efforts and build a positive brand image.
Looking Ahead
The auto industry faces dramatic change ahead. Key influences include government policies, shifts in the Inflation Reduction Act, emissions rules, and foreign trade impacts. These could reshape markets and innovation, ultimately defining the future of the automotive industry. To stay ahead, engage with experts and monitor the market on an automotive inventory data platform.
Lotlinx’s Quarterly Vincensus Report covers consumer and automotive technology trends in the automotive industry and more OEM-specific and dealership inventory, pricing, and markdown insights.
For more on auto dealership trends, contact Lotlinx and get a free demo on how our AI platform can help.