Competitive pressures. Economic uncertainty. Evolving technology. The automotive industry is innovating amidst serious challenges. Original equipment manufacturers (OEMs) must discover new ways to stay relevant, profitable, and adaptable as new technologies emerge, consumer expectations shift, and market conditions fluctuate in the year ahead.
From a slower-than-expected shift to battery electric vehicles (BEVs) to changing expectations in customers’ relationship with their cars, a number of complex challenges and opportunities will shape the industry in 2025.
Publicis Sapient Transportation & Mobility experts break down the top five trends that will define the industry a year from now, based on market research and industry expertise.
In this challenging environment, OEMs must find new sources of revenue. One promising source is digital services—provided they offer real value.
The biggest challenge for OEMs lies in offering digital services that genuinely enhance the customer experience. Subscription features like heated seats, premium audio systems, remote engine start, and parking assist often fail to resonate with customers. Why would they want to continue paying for features in a car they already own?
Moreover, cars are increasingly designed by software engineers who may prioritize technological features over customer needs. This mirrors the experience of smartphone users, who rarely take advantage of their device’s full catalog of features. This ultimately creates a gap between consumers’ needs and what the vehicles offer. To close this gap, OEMs must ensure that customer needs—rather than feasibility—drive both design and engineering.
Additionally, dealers need to be equipped with specialized knowledge about digital features. Having this knowledge enables them to understand what the vehicle does and how it will make customers’ lives easier. By linking features directly to specific customer needs, dealers will be able to make a clearer value proposition.
For most drivers, their relationship with their car is relatively simple: their vehicle gets them from point A to point B. However, the rise of generative AI could redefine this relationship.
Modern, digitally-enabled cars already collect a wealth of data, both on drivers and the car itself through telematics systems. But with the integration of generative AI, these vehicles will begin to understand their owners over time. By leveraging past data and pattern recognition, cars will anticipate driver needs. At the very least, this technology will turn cars into personal concierges; at its most advanced, it will transform cars into personal extensions of the driver.
One of generative AI’s key advantages is its ability to create new, intuitive interfaces that will allow for real-time updates based on individual behavior. This means that the software will continuously adapt and evolve, offering a personalized experience tailored to each driver rather than a one-size-fits-all solution for the mass market. This personalization will go beyond driving preferences and behaviors; eventually, it will touch virtually every aspect of a customer’s life, from health and wellbeing to entertainment.
Voice interaction is another area where generative AI promises significant advancements. Voice commands may replace digital screens altogether, potentially leading consumers back to physical interactions within the car. This trend is already emerging with the return of physical buttons. Physical buttons are considered safer because they eliminate the need to navigate through multiple layers of digital menus. In fact, starting in 2026, cars seeking the highest safety rating in Europe will be required to have physical buttons.
In which functions will Gen AI be most important? (No additional content provided.)
In response to the pandemic, OEMs began to shift their focus to online sales. However, e-commerce didn’t gain sustainable traction and has yet to become a main driver of business.
Car buyers still see dealerships, and the hands-on experiences they enable, as critical touchpoints in their purchase journey. They want to inspect, test drive, and ask questions about vehicles before buying them.
Since dealers remain an essential part of the customer journey, OEMs must support them, not overlook them. So, what can OEMs do to help dealers succeed? They can develop services and tools that help dealers cut costs, maximize efficiency, and increase customer satisfaction.
A digital agent built for dealers can be a useful tool; helping field on-site questions from potential customers, especially during high-volume times like weekends. The technology can provide accurate, up-to-date, and relevant information about everything from tax credits to charge point installation for EVs, which often have regulations that change frequently and vary by region.
At the same time, simply equipping dealers with services and tools isn’t enough; they must actually use them. OEMs and dealerships should thus incentivize the adoption of these digital tools so that dealers don’t simply revert back to their old ways of selling.
According to Alyssa Altman, Publicis Sapient’s Transportation & Mobility Lead for North America, OEMs and dealers must “unify all of the moments that matter during the car buying and owning journey so that the online experience outside of the dealership and the offline experience at the dealership are unified, integrated and coordinated.” This integration will ensure a seamless and cohesive car-buying experience, blending the best of digital and physical interactions.
“Experience, experience, experience. It’s the most important thing in the automotive industry: getting closer to customers,” says Beil. But how exactly can OEMs achieve this?
One method: Restructure the organization around the customer. Internal capabilities need to ‘think software’ within a traditional product organization. The speed of software development and the ability to adapt with changing user behavior don’t align with the current product development lifecycle. OEMs must shift their mindset in order to change the operating model.
“Data-driven decision-making would help orient OEMs more effectively around the customer and help them be more efficient and effective in how they organize across the value chain,” says Altman. “The advent of generative AI can even further help OEMs fundamentally reduce costs, increase conversions and improve profitability.”
How mature are organizations’ data strategies? According to Publicis Sapient research, only 3% of surveyed c-suite executives in the industry claimed to have a mature enterprise data strategy that had been fully integrated and leveraged in their business.
The future of cars may be electric, but 2024 proved to be a rocky year. After a period of hype, many auto manufacturers announced aggressive timelines for launching new BEVs. Now, some are walking back or delaying some of their commitments, and EV purchases seem to have hit a plateau. Even industry giants like Tesla are facing difficulties: Its stocks slid in 2024, prompting the company to lower vehicle prices, expand into new markets, and introduce new models.
What’s causing the slowdown? Cost and convenience continue to play a factor for prospective buyers. EVs are still more expensive than gas-powered cars, making them feel like luxury purchases. Charging infrastructure remains a significant challenge, and many customers worry that they won’t have ready access to charging points when they need them. Charging an EV also comes with installation plus residential electricity costs, especially in regions where electricity is more expensive than gas. EVs often depreciate faster than internal combustion engine (ICE) cars, losing more value in the secondhand market. In short, the total cost of EV ownership is higher than many drivers can justify. This financial risk, coupled with an uncertain economy, has discouraged many potential buyers.
In this context, hybrid cars have regained ground with consumers. Between quarters one and two in 2024, sales of hybrids increased from 8.6 to 9.6 percent—a small but significant change, especially since they out-sold all-electric vehicles. These gains mean that consumers have even less of an appetite to purchase all-electric vehicles.
To help customers overcome these barriers, OEMs must provide value at every step of the EV journey. For example, a digital tool that maps out residential charging stations helps EV owners find convenient places to charge their vehicles, reducing range anxiety and making EV ownership more practical.
Auto manufacturers can put them in the driver’s seat of the electric revolution.
The automotive industry is entering a new era, one that redefines vehicles and the driving experience. The shift toward hybrid and EVs, the growth of new revenue streams, the integration of AI for personalized interactions, the evolving role of dealerships, and the importance of knowing consumers—all point to the same thing: an added emphasis on innovation, customer centricity, and data-driven insights. The road ahead may be filled with complex challenges, but it also contains opportunities for companies that are willing to innovate and adapt. “It’s important to still invest in innovation or have an innovation partner to help move OEMs along a long-term plan,” says Altman. “Be clear on your goals and don’t be afraid to invest in those areas while you’re going through cost-cutting measures.”
The industry isn’t just moving forward in 2025; it’s accelerating toward the future.
ALYSSA ALTMAN
Transportation & Mobility Lead, North America, Publicis Sapient
alyssa.altman@publicissapient.com
PHILIP BEIL
Transportation & Mobility Lead, Europe and APAC, Publicis Sapient
philip.beil@publicissapient.com