Dec. 31, 2025 | Retail Year-In-Review: Dealers' regulatory battles and Amazon's arrival

Welcome to Daily Drive for Wednesday, December 31st, 2025. I'm Kellan Walker in Las Vegas.

Today on the show we continue our annual series of conversations about the biggest stories

of the past year, pivoting now to the automotive retail landscape in 2025. I'm joined by members

of the Automotive News retail team. Melissa Burden and Dan Shine are senior retail editors

for automotive news. John Hutter covers retail F&I. Paige Hodder covers dealership mergers

and acquisitions and Group One Automotive. Mark Homer covers retail tech. Here's the

first part of our conversation. Melissa and Dan, as senior retail editors, give us the

bird's-eye view. What defined 2025 in auto retail and what were the dominant themes?

Go take it away, Melissa.

Okay. I think it was really a mix. I'd say that for a couple of reasons because we started

the year, there was a lot of optimism with the new president and I think there were dealers

really particularly thought that I think a lot of the regulations and some of the laws would

change for the better for them. But then as the year kind of went on, we had tariffs which kind of

really I think changed the tone somewhat of their optimism as well as we had other factors like

consumer affordability and car prices or vehicle prices reaching on average over $50,000.

So there was kind of a mix of things I think that happened this year that led a little bit.

We even had like a chip shortage for some of the brands where they didn't have as many

microchips to make some other vehicles and so some brands saw shortages on certain trims and

I think dealers were still profitable for the most part. Some did better than others but that's

kind of what I would say. I would say tariffs, affordability challenges, AI was another big theme

and affordability was I think a big thing because not as many people were buying vehicles which

impacted FNI offices and their profitability. Tariffs kind of impacted parts sales and parts

pricing which pushed a lot of people, a lot of consumers to independent garages where they

thought they could get a cheaper car repair or they just put off car repairs and AI was

kind of around there and tantalizing dealerships and how can we use this and harness this to maybe

improve our customer service, improve our processes. So those are kind of the three

themes that I kind of take away. And Dan, would you say overall the dealers have a good year or a

bad year? Well, they're not by the side of the road picking up cans for the turn into the

grocery stores. I think they did okay. They would probably say not as good as they would like or

not as good as they've had in the past years but I still say most the well-run ones were profitable

and did just fine. Now, Melissa, Tariffs dominated headlines, tax credits disappeared and dealers had

to navigate constant uncertainty. How did they fare? I think most dealers kind of roll with the

punches. They're usually really good at pivoting when they need to. So I think that we saw a lot

of that this year. Tariffs, I think a lot of the automakers actually ended up taking on some of

the price increase that wasn't necessarily passed on to customers. So I think that was for some

helpful. But yeah, I think they generally just kind of roll with it and pretty adaptive.

And John, did tariffs and tax credit changes actually affect how dealers structure deals?

Well, if anything, you had those two bursts of consumers buying vehicles to get ahead of them.

One was in the spring where Trump started announcing tariffs and so consumers rushed to buy vehicles

before the tariffs started kicking in. And then you had the same thing where

consumers rushed to buy EVs before the end of the EV tax credit at the end of September. And so

in terms of structuring deals, obviously the loss of the EV tax credit could alter how

how OEMs play out their incentives. For example, are some going to

will leasing of EVs be as heavy? Are they going to push that as much? Because that was a tax

credit they could claim. That kind of remains to be seen. I think right now the biggest thing was

really just the rush of demand it caused. Now, of course, that's then kind of obviously faded,

which left dealers kind of doom and gloom in the most recent Cox survey. Gotcha.

Now, Paige, you cover group one. How did the publicly traded groups navigate this volatility

compared to independence? So I think it's a really different question when you are such

a large dealership group compared to say some of the smaller groups that if you're a small group

that maybe owns three Ford stores, that's a very different type of strategy than if, you know,

a large, large group like group one that encompasses many brands all over the country.

And I think one of the themes that came up a lot in our tariff coverage of the publics this year

was uncertainty. You know, it's kind of unclear often where these tariffs will impact, you know,

will the automakers take on the cost? Although in a lot of places they did,

you know, will we see price like parts prices increase? But I think a lot of the publics focused

on being as nimble as possible, you know, really focusing on their core profit centers

and just being ready to move and change if the time came. And for the most part, you know,

we didn't see any true terrible impacts on the publics this year, at least so far.

And Melissa, dealer sentiment in Q4 was the worst since COVID. What's driving that pessimism?

Well, I would say one thing with that to note is during when dealers were surveyed, it was in the

middle of the government shutdown, the longest one we've had. And I think that was, again,

uncertainty. There were a lot of questions about when the government was going to go back to work.

So I think they were a little bit more pessimistic, maybe, than they would have been

if you had surveyed them now. But John, I would imagine you might be able to talk a little bit

more about that. From what the Cox analysts were saying, it might be just the dealers coming off

of the boom times of, you know, before the tax credit, everybody was going out and buying all

their vehicles. And then, you know, that kind of slowed down now that the rush to beat the deadline

ended. And so they're kind of comparing it to that. There's also the profitability for

off vehicles have been slowly declining over a long period of time. And so,

but it's still better than pre-pandemic levels. But I mean, there could be a bit of that

affecting their outlooks. Got you. Now, Dan, fixed ops has always been dealer safety net.

Was that true in 2025? For the most part, I would say, yes, it was true. I think, you know,

the dealership service department still struggle with customer retention and keeping those customers

from straining to chain or independent repair facilities somewhere. And you mentioned the

Cox dealer sentiment, it was positive, still positive and optimistic territory, but it also

was less optimistic than it has been in the past. I have to think that their, you know,

and so, you know, repair bills are going up. And so people either stayed away,

they are putting off repairs, or they're trying to go find a cheaper alternative. And they,

for, you know, true or not true, they view dealerships as more expensive than, you know,

a chain store of pet boys or a Goodyear down the street. And so, while I think there were

still profit centers for dealerships, I think they were not as much as they have been in the

past. But again, this is a resilient group. And I think they'll, you know, kind of figure out how

to keep, you know, cars coming in and making money for dealerships. Now, let's pivot to

the retreat of EVs and the surge in hybrids. Now, John, the end of the $7,500 tax credit

was a turning point. Can you walk us through what happened? Again, the customers that if you're

going to go buy an EV, you obviously wanted to lock that in before the tax credit went away.

And so, you saw, I think these are preliminary numbers from JD Power for October, but basically,

EVs were like 13% of sales in September. Then they crashed to 5.2% in October. And that's the

end of the tax credit right there. I mean, you know, the customers bought them early,

and then without that, there wasn't any, it wasn't stimulating the demand.

Paige, how are dealers adjusting their inventory strategies now?

I think it's really a question that varies across the country. It depends on where you are and what

the EV market is like in the area you are. I recently spoke to a dealer in Alexandria in

Virginia right outside DC. You know, he's pretty confident they're going to continue to sell a

decent amount of EVs. But, you know, in other areas of the country, that probably won't be the case.

And, you know, I think another factor is the affordability equation. You know, EVs aren't

necessarily the cheapest cars out there. But with the tax credit and some of those leasing

incentives, they could be pretty affordable. And so, someone who, you know, maybe came into the

dealership looking for the best deal that they could get might have been convinced to get an EV

just because that really was the best deal. But without those credits, if you're in a place that

doesn't have a ton of charging or where you have to drive really long distances, then if you don't

have that affordability bonus, that doesn't make as much sense. And so, I think dealers really

have to reevaluate what their customers need and that changes without the tax credit. And

we will also all be waiting to see, you know, the demand, as John said, cratered in October.

Does it come back? And how fast? And what does that look like? You know, is everyone going to

hybrids now? I think there will be a period of, for everyone, waiting and seeing before we can

even really make some long-term predictions on strategy there. So, so far, I've been hearing a

lot of wait and see. Well, piggybacking off of Paige's answer, Melissa, now is the EV retail

model just fundamentally broken or just on pause? I think it kind of depends on the customer

and the brand. I think, you know, there will still be demand for EVs among certain customers,

maybe more in the luxury space where the buyer can afford maybe a little bit more and spending

a little bit more money on that. But I think it could depend on the brand and the way they buy

the vehicle could change. Gotcha. So, Dan, dealers spent hundreds of thousands of dollars on EV

infrastructure. Are they getting any return on their investment? They're getting some return,

but not full return. They, you know, a lot of the automakers, a lot of the manufacturers told them,

you're going to need to be ready for this. And so, a lot of service departments built special

bays or, you know, kind of made, you know, the EV bays are a little bit bigger than a normal one.

They put a lot of safety equipment in, they installed chargers in the front of the dealership,

all in anticipation that there was going to be, you know, kind of a lot of EVs to service in the

future. And there still, you know, there still are some, but not nearly the amount or that they

kind of expected. So, I think there's a little bit of grumbling that they spent a lot of money

and have not really had to use them very much. So, no, but, you know, but if, you know, EVs

continue to pick up a little bit, then, you know, eventually I suppose that they'll, you know,

some of that return on that investment. Now, John, NADA scored a major victory getting Biden

error rules tossed. What was that stake? The Federal Trade Commission's CARS rule

got thrown out in court on it, really on a technicality, just that the FTC hadn't followed

kind of the right administrative process in creating it. There was kind of two major components.

One was dealers would have been required to have greater transparency about what the actual price

of their vehicles were. I mean, you would have to list the kind of the all-in price with the

exception of, you know, government like taxes and fees on advertisements like your website.

And there was, there was also a requirement to do, you know, have like, you know, disclosure

after disclosure about what the, you know, what the vehicle's price would be at certain points,

you know, with or without the, you know, like FNI products and things like that.

The problem was that it was, the process they had kind of worked out was a little bit clunky and

that was, so, you know, it could have kind of complicated how dealers interact with customers.

So, you know, in terms of when the disclosures had to happen, how much paperwork would have been

involved with the whole thing. So in that sense, they've kind of, you know, they've kind of dodged

on that one. The offering price concept though, I mean, that's in a lot of states. So that,

that could be one where eventually it just gets adopted more and more. So it might,

they might have a temporary reprieve from that one.

Paige, does regulatory relief actually move the needle financially for dealership groups?

I think it's complicated. I think changing a regulation, especially if it involves,

you know, creating new forms or new procedures and like that costs money. Training, time,

all of that does cost money. But if it's something a dealership has already implemented,

it might not be worth it to unimplement it unless the process is truly like difficult.

And I think, you know, something that is important to emphasize is the federal government,

the federal regulators have taken a step back, but in a lot of states, state regulators have

really stepped up to fill that gap. So anyone who is maybe, I think most dealership compliance

lawyers would have said like, Hey, don't like think it's a free for all now, you know, your

state regulators, especially in states that are pushing back against the current administration,

we're really keeping an eye on the dealerships right now and, you know, really wanting to fulfill

the gap left by some of the federal agencies. So it's, you have to be constantly vigilant to

keep up with that kind of stuff and really aware of like the local regulations and stuff like that.

And so some of this, like not having to implement the cars rule probably saved the dealers some

money this year. But in California, they got their own new version. So maybe that didn't matter too

much to them. And, you know, I think a lot of them like to champion that and celebrate that. But I

think the actual compliance equation is pretty complicated when you break it down state by state.

Mark Homer, you've been waiting patiently. So Mark, Amazon autos jumped into use cars this year.

Should dealers be worried?

Not yes. That means that they're just getting into it. They're kind of ironing out the glitches.

They're probably making mistakes. They're seeking feedback and at an event where the Amazon autos

had spoke, I saw her speak in Denver earlier this fall. She basically apologized and said,

please be patient with us and give us feedback. So while it's too soon to tell, it's not a crisis

yet. But Mark, if you were to look into a crystal ball, how big of a threat is Amazon to traditional

shopping sites like the car gurus, the auto traders, the cars.com? It's funny to say that

because not that long ago, those were the upstarts and now they're the diehards. But

in any case, it's a variation of not yet because they have established spaces and systems in place.

They have slightly different goals. I think over time, they could chip into their business

if they do it right. So the key is going to be if Amazon can ramp up properly and reach

dealerships and customers the way they both respect the culture and the sensibilities that

they have. Melissa, does Amazon disrupt dealers or just change how customers find them?

I do think that customers would find them via a different way, which could disrupt a little

bit of their business. But I think a lot of them that have dealers that have signed up

are really seeing this as more a lead generator, kind of like the other sites that they're using,

like auto trader, car gurus, etc. So we'll see. I think Mark was right. We'll see over time if

they really refine their processes and if more dealers sign up, it could change. And if more

brands per se, for instance, also pair with Amazon. I got another one for you, Melissa. This is more

on the buy sale side of it. But will this affect dealership valuations if customer acquisition

gets more expensive? It could. Maybe I think it would be very dependent on the brand.

So I don't think it would be across the board. That's all for this episode of Daily Drive.

We're off tomorrow for the New Year's Day holiday. Come back on Friday when we'll continue our look

at the retail trends and topics throughout 2025 with a focus on AI, M&A, and service and parts.

Dealerships have been cautious about AI and those that are adopting it are not going all

out all at once. Thanks to Automotive News executive producer Jake Nier for his help on today's

podcast. You can get the latest news on auto retail, government regulations, and everything

happening in the auto industry at AutoNews.com. We'd love to hear from you. Let us know what

you think of the show and the topics we cover today. Send us an email at dailydrive at AutoNews.com

or leave us a voicemail at 313-444-2774. And if you enjoyed the podcast, remember to like,

Dec. 31, 2025 | Retail Year-In-Review: Dealers' regulatory battles and Amazon's arrival

About this episode

tariffs

consumer affordability

vehicle prices

chip shortage

EV tax credit

OEMs

incentives

leasing of EVs

parts prices

dealer sentiment

$7,500 tax credit

hybrids

EV

CARS rule

transparency

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