#United States #Atlanta #EV market #Cox Automotive #U.S. auto dealers

Understanding the Q3 2025 Cox Automotive Dealer Sentiment Index

As we move into the latter part of 2025, the auto industry is experiencing a mix of challenges and resilience, especially for U.S. auto dealers. The latest survey results from the Cox Automotive Dealer Sentiment Index (CADSI) for the third quarter highlight dealer perspectives as they navigate through a fluctuating economic landscape. This survey, conducted from July 22 to August 4, 2025, included responses from 891 dealers, giving a comprehensive look into current sentiments and market expectations.

Key Findings from the Index

1. Steady Confidence Levels: Despite facing considerable economic uncertainty, U.S. auto dealers report a steady outlook with the current market index rising to 43, up one point from the previous quarter. Although still below the neutral threshold of 50, this incremental increase signifies a stable sentiment amongst dealers, lingering amidst fluctuations in buyer interest and consumer confidence.
2. Profit Trends: Profitability has taken a slight hit with the profit index declining from 39 to 38. Franchised dealers reported a relatively stronger performance at 49 compared to independent dealers' score of 34. This indicates a widening gap where franchised dealers are faring better in current economic conditions impacting profit margins.
3. Decline in Customer Traffic: After witnessing a surge in Q2, there was a substantial drop in customer traffic during Q3, falling from 37 to 33. Franchised dealers noted a significant drop from 50 to 43, showcasing concerns about foot traffic amidst economic pressures.
4. Profitability Versus Costs: As operating expenses rise, the cost index remains at its highest point yet at 70, suggesting that though profit margins are shrinking, dealers are seeing unprecedented costs impacting their operations.
5. Inventory Changes: Interestingly, new-vehicle inventory recovered from the declines experienced in previous quarters, rising from 50 to 57. However, this increased inventory coincides with a softer sales environment, implying a cautious approach to inventory management.
6. Price Pressure: The pressure to lower prices for inventory has intensified, indicated by the price pressure index climbing from 57 to 61. This raises concerns for many dealers as they strive to remain competitive in a saturated market.
7. Electric Vehicle Sentiments: A significant downturn was noted in the electric vehicle market outlook. Despite strong sales in July, dealer expectations for future sales fell to 30, the lowest recorded. This drop is largely attributed to apprehensions surrounding the expiration of key government-backed tax credits that incentivize electric vehicle purchases.

Economic Considerations

Dealers continue to pinpoint economic factors as primary challenges affecting their business, with 44% citing it as their top concern. Interest rates similarly remain an influential factor at 43%, both showing a slight decline compared to the previous quarter but nonetheless impacting dealer strategies.

Conclusion

The Q3 2025 Dealer Sentiment Index underscores a landscape characterized by cautious optimism among U.S. auto dealers. While profitability is under pressure and the market outlook remains fragile due to external economic factors, the resilience demonstrated is indicative of a market that, despite its challenges, continues to adapt and seek opportunities. The methodologies employed in compiling the CADSI reflect a robust analysis, ensuring dealer feedback shapes future insights on market dynamics.

For more in-depth insights and a complete commentary, the full report is accessible through Cox Automotive's official channels. As the automotive landscape continues to evolve, further updates will be pivotal in understanding how dealers navigate upcoming challenges and opportunities ahead.