The latest Cox Automotive Dealer Sentiment Index (CADSI) reveals that U.S. dealers still face challenges in early 2025, with overall sentiment remaining below the neutral threshold. Despite a slight improvement from the previous quarter, concerns surrounding profitability, rising costs, and economic uncertainty persist. Erin Keating, executive analyst at Cox Automotive, joins us in today’s episode of CBT Now to break down some of the surprising findings from the Q1 survey.
The CADSI is a quarterly survey assessing how auto dealers feel about the market, sales, inventory, fixed operations, climate, and other factors. This survey had just under a thousand dealers, half franchise and the remaining independent. The survey was conducted from January 28 to February 10.
The Q1 2025 CADSI recorded a sentiment score of 44, still below the ideal baseline of 50. However, the score is up two points from last quarter and two points year-over-year. Despite the improvement, dealer confidence remains relatively weak. Profitability concerns continue to weigh on dealers, and although cost pressures have slightly eased, they remain a significant challenge.
One of the most notable takeaways from the Q1 report was the regional disparities in dealer sentiment. Dealers in the Northeast reported more negative outlooks across multiple categories than their South, Midwest, and West counterparts.
Another point of interest is that the report found that dealer sentiment toward EVs remained relatively static, not going up or down. It was unilateral across new, used, independent, and franchise dealers that the federal EV tax credit helps move the metal. Still, dealers expressed hesitancy in their ability to maintain sales momentum if the credit is scrapped.
Franchise dealers reported growing concerns over competition, with 16% citing it as a significant challenge, more than double the 7% recorded in Q1 2023.
Looking ahead, dealers are focused on navigating economic uncertainty, particularly interest rates and inflation. While political climate concerns have declined following the transition to the Trump administration, dealers remain wary of market fluctuations.
Keating notes that auto sales and inventory levels remain stable for now. Still, dealers are carefully strategizing their stock levels to offset potential tariff-related pricing disruptions and avoid overloading inventory that’s not moving.
"The tax credits help a lot, and they move the metal. If those go away, there is some hesitancy around how much they can sustain the level of sales they have right now." – Erin Keating
