How your business can survive in 2025

By Ian Plummer,  commercial director, Auto Trader

Each year, our team of analysts use a combination of industry figures – as well as our own extensive data and insights – to assess the market and forecast the key trends and overall movement for the year ahead. Here I’ll share what we expect for 2025, including the challenges and complexities – and the implications for retailers and manufacturers.

Why acquiring ‘new-to-brand’ customers is critical
Starting with the new car market, we predicted it will remain just under the two million car level next year, rising 2% in 2025 from an estimated 1.94 million registrations to c.1.98 million. However, with manufacturers and retailers facing a challenging combination of stricter regulatory targets, uncertain brand loyalty – and more marques and models than ever vying for a share of a still constrained market – we believe a brand ‘conquest’ led approach of attracting new customers will be critical for success.
While it will mark the fourth consecutive year of growth, the new car market will be 14% below the 2.31m new car registrations recorded in pre-pandemic 2019. Since the atypical years of 2021 and 2022, new car supply has returned, retail demand for new electric vehicles (EV) has eased and Zero Emission Vehicle (ZEV) targets have been introduced. As a result, 2024 saw a return to ‘push’ dynamics, albeit to a lesser extent than pre-pandemic levels, with discounts rising to 9% in October, up from 7.4% 12 months earlier.
While activity, along with increased marketing investment, has helped stimulate consumer interest, EV market share in 2024 is predicted to reach just 18%, short of the 22% ZEV requirement. And with an estimated 740,000 registrations, private new car sales are expected to be down 27% in 2024 vs 2019’s total of around one million, making it the lowest level in over two decades.
As well as a smaller market, due in part to the recent increase in new car prices, established players will face tougher competition, with an additional 17 automotive brands (and 81 models) vying for supremacy in 2025 compared to 2019. It will require them to rebuild brand equity as consumers remain less familiar with the growing array of new electric models.
With increased ZEV targets (28%) and car buyers increasingly open to new options, manufacturers and retailers will need to focus on more than just converting existing petrol or diesel customers into their own electric models. As the new EV market share rises to an estimated 23% in 2025 – and each manufacturer aims at their own 28% ZEV objective – targeted data-driven marketing will be crucial, getting their brand, deals and stock in front of more buyers than their competitors.

The used car market will rise
Now onto our predictions for the pre-loved car market. Despite the political instability of a general election and a challenging economic backdrop, demand remained extremely resilient in 2024, as reflected in the 970.6m visits to our platform over the last 12 months; 74m more than the same period last year. Given the strong market fundamentals, and an improving economic outlook, we expect it will maintain the strong growth momentum of the last two years and rise from around 7.61m sales this year to close to 7.70m. Although, at 1% YoY, it’s behind the c.5% annual increase recorded since 2022, it means the market will be within just 3% of pre-pandemic volumes – and stock should continue to turn over at a similarly fast pace as seen in 2024.
However, the complexity and sourcing challenges of the last three years will remain as the full impact of the three million new cars not sold during the pandemic continues to flow through the parc, shifting from 1-3-year-old cars to the 3-5-year-old segment of the market – and begin to impact 5-10. In 2019 there were c.4.8m 3-5-year-old cars in the parc and, by the end of 2024, it falls 37% to just 3m. By the end of 2025, it will fall to 2.9m, making it the lowest level on record.

Parc passes peak petrol
The big shifts in fuel type supply will create further sourcing challenges in 2025. According to our analysis, 2024 will mark a peak in the volume of petrol cars in the UK car parc, with its share beginning to soften from next year as electric supply continues to accelerate. Indeed, the number of EVs in the parc will reach 1.66m in 2025, which is a 33% increase on 2024 (1.25m) – and equates to a 5% share. On Auto Trader, EV stock rose 32% YoY in October 2024, while petrol numbers fell 7%, marking the seventh consecutive month of decline. By 2027, there’ll be nearly a million fewer petrol cars in the parc and, with demand unlikely to wane significantly anytime soon, we expect prices will rise, which means more competition for stock. As a result, having a used EV strategy in place will be even more vital for retailers.
Overall, 2024 has been another landmark year for automotive retailing. One that’s included a range of challenges – not least the introduction of ZEV targets, constrained supply, changing finance rules and the budget. But there has also been exceptionally strong used car demand, record levels of engagement on our platform, rapid speed of sale and the stabilisation of retail prices. And, with the more attractively priced and available stock in recent months helping to fuel new car interest, the overall retail market is entering 2025 on a strong footing.
The complexities that we all experienced in 2024 will remain and, in some cases, tighten, particularly within the new car market, where a rapidly growing array of brands will be competing for the attention of an increasingly fickle new EV buyer.
Brands and retailers alike cannot afford to stand still and will need to adopt a conquest mindset next year, as well as focusing on what they can excel at: delivering great product, a great experience and a great performance – all of which we’ll continue to support through our technology, data and our investments.