Top Challenges Facing Car Dealerships in 2025
If you run a car dealership, you've likely encountered at least a few challenges over the past few years. Supply issues during the COVID-19 era transformed the car sales industry, and the rise of AI in the years since has further affected how dealerships operate. In 2025, certain challenges facing car dealerships persist, while new barriers continue to emerge.
Explore the top challenges car dealerships currently face as your business strives to overcome them. Edge Financial Services helps dealerships like yours boost sales with seamless financing and quick approvals.
The Biggest Challenges Dealerships Face in 2025
The car sales industry has faced unprecedented shifts and challenges over the past few years. Many dealerships need to adjust their sales strategies almost quarterly to account for new trends, consumer expectations, and shifts in pricing.
Being aware of the top challenges facing car dealerships is the first step in overcoming them. These are a few barriers to keep on your radar in 2025.
Regulating Inventory Management With Supply Chain Disruptions
Supply chain issues have impacted the car sales industry since 2020, when COVID-19 shutdowns created a widespread shortage of parts. Today, manufacturers are still recovering from this shift, and workforce retention issues continue to impact supply.
Because of this, car dealerships must stay on their toes when it comes to inventory management. Some months may see booms in inventory, while others may experience more obvious shortages and delays. Dealers need to adapt their sales strategies as their inventory shifts.
Adjusting Profit Margins After the Post-COVID Boom
Automotive shortages in the post-COVID era allowed dealerships to increase their prices significantly and benefit from impressive profit margins. Now, supply has become a bit more predictable, and consumers are no longer prepared to pay a premium for vehicles that are already nearing the top of their budgets.
Dealerships need to adjust their pricing strategies regularly to reflect supply, demand, and competitor pricing.
Meeting the Evolving Needs and Preferences of Customers
The digital transformation over the past decade has slowly evolved the way consumers prefer to buy cars. Visiting a dealership in person, test-driving a vehicle, and making a purchase in the same visit is no longer the only way to purchase a car. Now, consumers want to:
- Browse inventory online
- Take virtual tours of vehicles in stock
- Schedule appointments and test drives online
- Purchase vehicles online, sight-unseen, in some cases
Dealers must meet consumers where they are to adjust to these challenges facing car dealerships and avoid losing business to competitors who have already adapted to new technology.
Adapting to the Growing Electric Vehicle (EV) Market
More and more customers are seeking hybrid or fully electric vehicles that operate on batteries rather than solely on gasoline. Dealerships have had to rework their inventories to include a higher percentage of electric vehicles and potentially remove some standard vehicles that are no longer selling as predictably.
Along with changing their inventories, dealerships must adjust their maintenance packages and mechanic services to reflect the differing upkeep needs of electric vehicles compared to standard ones.
Catering to Customers With Differing Financial Circumstances
Today's customers walk into dealerships with wildly diverse financial circumstances. Some have excellent credit scores and enough savings to pay sizable downpayments or purchase a vehicle with a lump sum check. Others have only a few thousand dollars to their names and less-than-ideal credit.
Your dealership needs financing solutions to cater to all types of customers. This might mean offering a broader range of auto loans and financing options for customers who need more financial support.
Boost Sales With Edge Financial Services
If you are looking to overcome the common challenges facing car dealerships, working with the right financial services can help. At Edge Financial Services, we provide financing for customers with poor credit and other financial barriers. We can help you boost sales while you focus on operational efficiency.
Contact us today to learn about our auto dealer partner program.
