EVs, technology and used car sales: Top 2025 automotive predictions

We recently launched our latest edition of our Insight Quarterly report, revealing current automotive market data, from the latest used and new car sales, to the state of the EV revolution. Utilising these insights and the thoughts of our industry partners, this article focuses on the top automotive trends businesses should be aware of in 2025.

The automotive sector is gearing up for a transformative 2025, driven by changes in consumer behaviour, regulatory pressures and technological advancements. Using the latest automotive market data and the insights from industry experts, we’ve broken down what this means for fleets, OEMs and dealers.

Electric vehicles surge into the mainstream despite challenges 

The shift to EVs will accelerate in 2025, driven by governmental mandates, incentives, and consumer demand for sustainable options. Two in every five (21%) new cars registered in 2024 were EVs, a trend expected to grow by a further 5% in 2025.

Despite this growing interest from consumers, challenges for the industry persist. For OEMs, who are rapidly reducing production of ICE vehicles in line with government mandates, the pressure to scale their EV production while maintaining profitability will intensify. Working with fleet owners could help steady revenue streams, as these businesses are quickly expanding their EV fleets, due to government and environmental pressures, and the savings they’ll make in fuel and maintenance.

Dealerships on the other hand, face the challenge of adapting to a new sales mix. It’s no secret that EVs require a different sales and servicing approach, expected to impact profit margins. This is due to electric vehicles requiring less frequent servicing and maintenance, as well as the required specialised knowledge needed to work on EVs. The issue of residual values and customer confidence in the lifespan of electric vehicles, will also cause strain on dealers. In essence, it’s more important than ever to explore new technologies, train staff and educate consumers.

They’re not in it alone in that challenge, though. Cox Automotive’s latest venture EV Battery Solutions, aims to help alleviate consumer concerns and equip businesses with the technology they need to meet the demand of electrification.

New car registrations continue to climb, with EVs leading the charge 

Despite new car registrations sitting 11.6% below the 2001-2019 average in 2024, there’s been a slight growth compared to previous years, and this is expected to continue between 2025 and 2027.

However, decisions on a global scale continue to shape the composition, competitiveness, and future of the new car market. In particular, the interest in EVs and other new energy vehicles (NEV) is set to have a huge impact. By 2027, petrol/MHEV registrations are predicted to decrease from 51% to 35%, while diesel/MHEV vehicle registrations are set to decline by nearly 57%. In contrast, EV registrations are projected to rise by 165.4%, while PHEVs and HEVs will grow from 22% to 28%.

For OEMs this highlights the need to produce more EVs, despite their profitability in the UK being challenged by manufacturers in China. While they previously dominated the UK EV market, OEMs are facing competition from Chinese manufacturers like BYD, GWM, Omoda, Jaecoo, and Polestar, which have brought lower-priced new energy vehicles to market. These new players are appealing to consumers who are seeking a more sustainable option, at a more affordable price. Something expected to increase further as economic pressures continue into the new year.

To achieve volume growth in this evolving market, OEMs will need to invest in new technology while preserving profit margins in the face of rising competition. This is no mean feat, especially considering tightening emission regulations and consumer expectations. The challenge could see OEMs reconsidering their regional focus and market mix to enhance profitability, meaning potential fewer choices on the UK market.

For dealers, EVs leading the charge in new car registrations means the pressure to train staff and invest in new technologies will only get stronger in 2025 and beyond.

While challenging in the short-term, the investment will certainly be worth it in the long-run, and working with more affordable Chinese manufacturers could give dealers a strategic advantage.

When it comes to fleet owners, who are increasingly expected to lead by example in sustainable transportation, this shift in the new car market means the challenge of managing the residual values of EVs will remain prominent.

The used car market will continue to see supply challenges

In 2025, the used car market faces a dual reality. On the one hand, demand for used vehicles will remain robust due to the gap in affordable new cars. On the other hand, supply challenges will persist thanks to pandemic disruptions. This means a shortage of young ICE vehicles will likely elevate values and create fierce competition amongst dealers.

Thanks to de-fleeting cycles and salary sacrifice programs, there’ll likely be a steady influx of nearly new electric vehicles into the used car market. In theory this is great as we know interest for new energy vehicles is growing, but it comes with challenges. Dealers must tackle the issue of residual value of used EVs impacting their profit margins, while managing consumer hesitations around second-hand battery quality and charging costs, while energy prices continue to rise.

Online retail expectations are more important than ever 

Data shows the proportion of all UK retail sales being online continues to grow, something expected to continue in 2025. However, standards are also soaring, thanks to FCA’s 2023 Consumer Duty Principles, which calls for fairer digital experiences for consumers. For the automotive industry, this creates a growing demand for offering a better digital journey for consumers during the exploration stage as well as when buying and financing vehicles.

Retail solutions like Codeweavers, which offers accessible and comparable information for consumers, are therefore key to building trust and driving sales. This is also true of financial services, which as recent as October 2024 saw a Court of Appeal judgement demanding transparency in financing options. While these new standards and judgements can seem challenging and somewhat expensive to keep up with, it’s essential for OEMs and dealers need to carefully consider their online retail capabilities, sooner rather than later.

As we head into the new year then, the market growth seen in 2024 certainly offers glimmers of hope, especially in the used car market. However, it’s clear that UK automotive has still not recovered from the impact of pandemic-related supply chain constraints.

This, paired with the continued effects of tough economic conditions influencing buying behaviour and business costs, highlights that while there’s growth to be celebrated, more challenges lie on the road ahead. To thrive in this era of transformation, businesses should stay up to date with the momentum driving these changes, while embracing innovation and remaining as agile as possible.