As we review the vehicle inventory, carryover, and markdown trends from the Lotlinx Q4 2024 Automotive Market Report, the automotive market has revealed several important insights into the ongoing challenges and opportunities for dealerships and OEMs.

Rising inventory levels, evolving consumer preferences, and the steady expansion of hybrid and electric vehicle (EV) sales continue to shape this year’s competitive market in 2025.

In the previous quarter, hybrid and EV sales gained traction, laying the foundation for continued momentum in Q4. Hybrid vehicle sales climbed 23% quarter-over-quarter, now making up 22% of all new vehicle sales, while EV sales saw a 22% increase. Despite these shifts, internal combustion engine (ICE) vehicles still dominated the used market, accounting for over 90% of sales. Understanding these developments is important for dealers and OEMs as they refine their strategies in 2025.

The continued rise of hybrid and electric vehicles

Consumer demand for electrified vehicles remained strong in Q4, with hybrid vehicle sales increasing by 23% QoQ and EV sales rising by 17%. Notably, the day supply for new EVs dropped by 12 days quarter-over-quarter, signaling healthy turnover. However, aged EV inventory continues to be a challenge, necessitating refined pricing and marketing strategies to maintain momentum.

The used vehicle market also saw growth in hybrid and EV sales. Hybrid sales rose by 8% quarter-over-quarter, while used EVs maintained steady growth. Despite these gains, ICE vehicles still constitute the majority of used car sales, reflecting a more gradual shift in the transition to electrification. Performance varied among OEMs, with some experiencing strong sales growth, while others encountered hurdles with pricing and inventory management.

Inventory pressures and market adjustments

Managing inventory levels remained a key challenge throughout Q4 2024. New vehicle day supply increased to 76 days, up seven days QoQ and 20 days year-over-year. Aged inventory reached its highest level of the year at 54%, emphasizing the growing need for strategic stock management. The used vehicle segment saw a five-day increase in day supply quarter-over-quarter, reaching 42 days, though it remained two days lower YoY.

Certain brands faced notable inventory challenges. Acura saw a 25% reduction in carryover inventory, primarily due to lower QX60 and QX80 stock levels. Jeep Grand Cherokee 4XE sales jumped 86% quarter-over-quarter, leading to a steep decline in hybrid day supply. Chevrolet continued expanding its hybrid and EV portfolio, securing a 17% market share in the electrified segment. These trends underscore the significance of brand-specific inventory strategies tailored to shifting consumer demand.

Pricing strategies and discounting trends

Pricing strategies played a significant role in balancing profitability with inventory challenges. The average last listed price for new vehicles increased by 3% quarter-over-quarter and 2% year-over-year, while used vehicle pricing remained stable quarter-over-quarter but declined by 5% year-over-year.

There was a slight rise in markdown activity, with the percentage of units sold with a price reduction increasing by 2% quarter-over-quarter for both new and used vehicles. This suggests that while new vehicle pricing remains relatively firm, the used market is facing added pressure to stay competitive. As the market evolves, dealerships will need to stay agile in their pricing strategies to optimize sales while maintaining margins.

Divergent performance among OEMs

Q4 2024 results varied widely across OEMs, with some brands capitalizing on consumer demand while others grappled with inventory imbalances. Luxury brands experienced fluctuations, with some enjoying strong sales while others struggled with aging inventory. Cadillac successfully lowered its aged EV inventory to 29%, reflecting a 15% quarter-over-quarter reduction. Ford, on the other hand, saw an increase in hybrid prices, primarily driven by a sales mix shift favoring higher-priced hybrid models.

The data highlights the importance of OEMs refining their supply chain and pricing strategies to align with consumer demand. Those that effectively manage supply and demand will be in a stronger position to succeed in the evolving marketplace.

Trends in the used-vehicle sector

The used-vehicle market remained relatively steady in Q4 2024, with minor fluctuations in day supply. Some brands successfully reduced their day supply, demonstrating strong inventory management, while others faced challenges moving older stock, leading to higher inventory levels and potential pricing adjustments.

While overall pricing trends in the used market showed little volatility, competitive pricing strategies will remain essential for dealerships seeking to maximize sales. The steady demand for hybrids and gas-powered used vehicles highlights the importance of inventory strategies that can adapt to shifting market conditions.

Key strategies in 2025

The insights from Q4 2024 reinforce the need for proactive inventory control, strategic pricing, and stronger consumer engagement. As the industry moves along in 2025, dealerships and OEMs must remain flexible and responsive to market shifts.

A key component of future success lies in leveraging artificial intelligence for optimizing inventory management. AI-driven tools can analyze market trends, predict demand, and ensure that dealerships have the right vehicles in stock at the right time. By utilizing AI, dealerships can reduce inventory turnover times, minimize losses from unsold vehicles, and improve overall profitability.

Auto retailers that incorporate AI into their inventory strategies can gain a competitive edge by streamlining operations and making data-driven decisions. Key strategies for success include using AI-powered insights to anticipate demand and optimize stock levels, implementing dynamic pricing models to remain competitive, strengthening digital platforms to attract and engage customers, preparing for the long-term transition to hybrid and EV models while managing ICE inventory, and leveraging predictive analytics to refine sales and inventory strategies.

Len Short is the executive chairman of Lotlinx, who an inventory platform that can enable dealers to automatically adapt to market dynamics, mitigating inventory risk through VIN-specific strategies. For more information, visit www.lotlinx.com.