The Automotive Industry Poised for Changes in 2025
The automotive industry is expected to undergo significant changes in 2025, according to analysts at Barclays, who have identified five key themes that will shape the sector during what they describe as a “critical year”.
The Seasonally Adjusted Annual Rate of US auto sales is stabilizing at respectable levels, but remains below the pre-pandemic benchmark of 17 million units annually. While current levels offer momentum, analysts caution against expectations of surpassing 16 million units sustainably.
Inventory management is a key concern, with US inventories exceeding the “new normal” range of 2.5 to 3.0 million units. This surplus risks pressuring vehicle prices and could test the discipline of automakers in maintaining production levels that align with market demand.
The automotive market has experienced modest pricing normalization, with average transaction prices declining slightly year-over-year in 2024. Barclays flags that affordability concerns are mounting, yet OEMs have generally resisted steep discounts, reflecting their commitment to maintaining pricing strength.
The competitive landscape is altering, with Stellantis suffering a decline in US market share, while General Motors and Ford made marginal gains. As competitive pressures increase, the ability of automakers to adapt their pricing strategies without eroding profitability will be closely watched.
Vehicle mix trends signal a shift toward more cost-effective trim options within popular segments, which could alleviate pricing pressures for buyers while posing a challenge to automakers reliant on higher-margin models. Crossovers continue to dominate US sales, while the electric vehicle segment is growing but at a slower pace than previously anticipated.
Barclays underscores a year of recalibration for the automotive sector in 2025, as manufacturers balance growth aspirations with market realities. Challenges in inventory, pricing, and shifting consumer preferences will test the resilience of industry players, making this a decisive period for strategies that ensure long-term stability.