U.S. auto dealers are growing more cautious about the future, with political uncertainty and rising tariffs weighing heavily on their expectations, according to Cox Automotive’s Q2 2025 Dealer Sentiment Index (CADSI). While franchised dealers reported stronger current conditions due to a solid spring sales pace, the overall outlook for the next three months has deteriorated sharply across the industry.
The latest CADSI survey, conducted between April 22 and May 5 and reflecting responses from 977 franchised and independent dealers, shows the current market index slipping to 42, down from 44 in Q1. That score signals that more dealers view the market as weak rather than strong.
In addition, market expectations saw the steepest drop, with the forward-looking index falling from 58 to 45, erasing two consecutive quarters of improvement. Independent dealers reported the most pessimistic view, with their outlook falling 15 points to 42. Franchised dealers also revised expectations downward, though less dramatically, from 61 to 56.
“Dealers have a front-line view of the U.S. auto market, which appears to be at an inflection point,” said Jonathan Smoke, Chief Economist at Cox Automotive. “The recent sales pace has been a positive, lifting current market sentiment higher for franchised dealers. But as we’ve said before, 2025 is going to be a roller coaster for this industry.”
Despite the clouded outlook, key indicators in the current market improved. The profitability index climbed to 39, its highest level in more than a year, driven by franchised dealers, who saw a jump from 41 to 52. Customer traffic also surged, with the overall index rising from 33 to 37. Franchised dealers recorded a 10-point increase in showroom visits, marking the largest quarterly gain since the metric’s introduction in Q3 2022.
However, growing demand led to tighter inventory. The new-vehicle inventory index fell to 50, the lowest since late 2022, while used-vehicle inventory dropped to 41. As a result, fewer dealers reported needing to cut prices, with the price pressure index declining from 63 to 57.
Meanwhile, the EV sentiment continued to slip. The EV sales index dropped to 44, while expectations for future EV performance fell to 37, the lowest since that question was first included in 2021. Still, optimism about the EV tax credit remains high, with the index reaching a record 62.
Top concerns among dealers have shifted. The U.S. economy is again the most-cited factor holding back business (51%), surpassing interest rates (42%). Political climate and tariffs on imported vehicles and parts surged into the top five concerns, reflecting heightened anxiety around trade and election-year volatility.
The CADSI is based on quarterly surveys of U.S. dealers and measures perceptions of market strength and expectations. Index values above 50 indicate more positive than negative sentiment; below 50 reflects the opposite.
