Soaring car prices and affordability remain at the top of mind for both dealers and consumers. On today’s episode of Inside Automotive, Brian Gordon, president of Dave Cantin Group, breaks down findings from the group’s 2025 Market Outlook Report Midyear Update and offers insights on how affordability pressures, emerging competition, and market trends are shaping dealership strategies for the rest of 2025.
The 2025 Market Outlook Report is published by the Dave Cantin Group twice a year through a partnership with Kaiser Associates. It includes dealer surveys, consumer surveys and research that provide an in-depth pulse on the auto market.
Affordability pressures remain top-of-mind
According to the mid-year update, the most prominent concern plaguing the auto industry remains affordability. This issue extends beyond the price of new vehicles to include used cars and is further intensified by the potential entry of Chinese automakers and shifts in U.S. trade policies.
The report found that roughly 75% of surveyed dealers view Chinese vehicles as an imminent threat to the U.S. auto market. It’s a rightful concern, as 40% of surveyed consumers said they would purchase Chinese vehicles today if they were available, primarily due to affordability.
Top-performing franchises provide quality and affordability
"We try to put all of these things together and give dealers information on how they should be thinking about all of these things that are happening so they actually know how to respond, react, what to think about, and what to do.”
The Dave Cantin Group also released its “Quality Price Index,” highlighting affordability and reliability as the two most important factors for car buyers. Brands that lead in market share typically meet both criteria. Among mainstream brands, Toyota, Buick and Mazda are top performers. In the luxury segment, Porsche, BMW, Lexus and Cadillac rank highest.
The threat of Chinese automakers
While Chinese automakers are unlikely to enter the U.S. market immediately, Gordon predicts that the Trump administration would tightly control any future entry. Chinese OEMs would likely be required to operate through the U.S. franchise system. With dealer and former Senator Bernie Moreno advising the administration, Gordon expects strong protection of the American franchise network.
The state of the M&A market
Mergers and acquisitions in the automotive sector are currently driven by supply and demand. More buyers than sellers are pushing dealership valuations higher. While the pace has slowed slightly as dealers become more selective, demand remains strong, keeping valuations elevated.
Lowering interest rates
Gordon also highlighted the potential impact of interest rates on dealerships and consumers. The Federal Reserve is considering rate cuts, driven by economic indicators such as the latest jobs report and inflation trends. While a dramatic decrease in loan rates is unlikely, even a modest reduction could improve consumer sentiment and make financing more affordable for car buyers. This, in turn, may positively affect dealership sales and overall industry performance.
Looking ahead
As the auto industry continues to charge forward, dealers are navigating affordability challenges, potential new competitors and a shifting market. The Dave Cantin Group’s 2025 Market Outlook Report provides a clear roadmap, helping dealers make informed decisions on inventory, M&A opportunities and financing strategies. Staying aware of these trends will be key for dealerships looking to remain competitive and thrive in the year ahead.
Read the full 2025 Market Outlook Report Midyear Update here.
