The automotive industry continues to evolve at a rapid pace, with 2025 shaping up to be another year of significant change. While regulatory challenges, franchise relations, and compliance issues remain at the forefront, there are also opportunities for dealers to strengthen their businesses and adapt to the shifting landscape. Here’s a look from Charapp & Weiss at the major issues that will impact auto dealerships in the year ahead.
Franchise Relations: Dealers Must Stay Vigilant
Manufacturers continue to test the limits of the traditional dealer network. Honda and Volkswagen have signaled their intent to bypass dealers with their Afeela and Scout brands, respectively, selling directly to consumers. Meanwhile, Nissan’s merger with Honda provides some relief to struggling Nissan dealers but raises questions about long-term stability. In this shifting environment, it is crucial for dealers to enforce their franchise rights and challenge unfair OEM demands.
Regulatory Uncertainty and Compliance Challenges
With a new administration taking office in 2025, dealers should not expect an immediate rollback of stringent regulations. Key compliance issues include:
- Vehicle Shopping Rule: The FTC’s rule micromanaging dealer advertising and pricing is under legal review, with potential for reversal depending on court decisions and legislative action.
- Advertising Scrutiny: Dealers must ensure clear, truthful pricing in advertisements to avoid FTC violations. Any bait-and-switch tactics or misleading financing terms could result in significant penalties.
- Fair Credit and Voluntary Protection Products (VPPs): Dealers should establish and enforce policies to prevent discrimination in financing and add-on product sales, aligning with best practices recommended by NADA and other industry groups.
Operational Hurdles: Recalls, Supplier Agreements, and EV Tax Credits
Operational challenges will also define 2025, with recalls remaining a top concern. Dealers must develop solid procedures to handle open recalls on both new and used vehicles, ensuring compliance with manufacturer mandates while protecting their business interests.
Another major issue is supplier agreements. The CDK cyberattack in 2024 exposed vulnerabilities in dealership management systems, prompting many dealers to reassess their contracts with software providers. Dealers must carefully negotiate terms to avoid long-term supplier obligations that may not serve their best interests.
Additionally, while EV tax credits remain available as of early 2025, the new administration may introduce policy changes. Dealers must stay updated on eligibility requirements and ensure proper IRS reporting to facilitate customer transactions smoothly.
Preparing for the Future
As always, dealerships that stay informed, engaged, and proactive will be best positioned to navigate industry disruptions. Supporting state and metro dealer associations, enforcing franchise rights, and maintaining rigorous compliance programs will be key to success in 2025 and beyond.
While challenges are inevitable, so are opportunities. By staying ahead of regulatory and operational developments, dealers can turn potential roadblocks into stepping stones for long-term growth.
