Concerns Arise in Automotive Retail: Demand Declines and Inventory Rises

In the latest analysis from ZeroSum, the automotive landscape is revealing troubling trends as we approach the end of the year. The "State of the Dealer" report indicates a significant downturn in demand for new vehicles. Sales projections suggest a decrease from 1.11 million units to approximately 1.1 million units for December, highlighting continuing challenges for dealerships.

The data shows that while demand is faltering, dealer inventories are seeing a troubling rise. In November alone, inventories increased almost 40,000 units, climbing to a total of 3.09 million vehicles available for sale. This marks the second consecutive month of inventory growth. In comparison, the movement of used and certified vehicles is also expected to decline, with decreases of 10,000 and 12,000 units, respectively.

Athyna Moore, Director of Dealer Success at ZeroSum, commented on these trends, stating, “November brought another month of challenging sales conditions. Inventory levels continue to rise, yet vehicle movement remains relatively flat, keeping turn rates below what we've seen earlier in the year.” The turn rates, which reflect the speed at which vehicles are sold, lingered at 36% in November, a noticeable drop from the high of 42% recorded in April 2025.

The inflationary pressures are evident as well. Average new vehicle prices have surged to $49,700, marking a modest increase—this is the third consecutive month prices have escalated. As OEMs factor in tariff-related costs, dealerships are increasingly deploying higher incentives to encourage sales. The average incentive has reached an annual high of $2,261 per new vehicle.

Meanwhile, the used vehicle market faces its own set of hurdles. The average used vehicle price has hit $27,100—the highest it has been this year—which compounds existing challenges as consumer confidence dwindles. Turn rates for used vehicles remained nearly unchanged from October to November, showing a minimal decline from 67% to 66%.

Moore explains the current circumstances, noting, “Inventory levels for used vehicles have been relatively stable, but movement dropped by over 70,000 units month-over-month. This indicates a growing caution among consumers regarding large purchases as the year draws to a close.” The uptick in prices typically signals heightened demand; however, the context suggests that rising prices may lead to greater consumer hesitation rather than an increase in sales.

The insights gleaned from ZeroSum’s report shed light on the need for dealers to adapt to the shifting automotive landscape. With competition intense and price sensitivity on the rise, it is critical for automotive retailers to deeply understand local market dynamics to navigate through these turbulent conditions effectively. The integration of innovative strategies and data-driven analytics will be essential in optimizing inventory management and enhancing customer engagement.

In summary, 2025 is closing out with pressing concerns for automotive retailers about demand and inventory. As the industry adjusts to these changes, the emphasis will be on strategizing for profitability while meeting the changing preferences of consumers. For further insights, interested readers can download the complete "State of the Dealer" report by ZeroSum, which includes detailed metrics on vehicle movement, turn rates, inventory, and pricing trends across the new, used, and certified pre-owned markets.

About ZeroSum

ZeroSum stands at the forefront of automotive marketing innovation, offering advanced inventory-based market intelligence and digital advertising solutions tailored for dealerships. Their pioneering SaaS platform, MarketAI, empowers the automotive sector with real-time consumer demand solutions, ensuring efficient marketing and improved customer acquisition strategies.

For more information about ZeroSum and its offerings, visit www.zerosum.ai.

About Advance Automotive

Established in 2017, Advance Automotive comprises a network of businesses specializing in marketing solutions driven by artificial intelligence, data, and software. The company supports automotive dealers and technology integration, boosting efficiency and marketing effectiveness through its various agencies and platforms.