On the Dash:
- Dealer confidence stayed steady in Q3 with a market index of 43, despite softer traffic and profitability, according to the Cox Automotive Dealer Sentiment Index (CADSI).
- Rising costs and pricing pressure remain key challenges, with CADSI reporting a record-high cost index of 70 and higher price pressure.
- EV sales outlook hit a record-low score of 30, driven by uncertainty over expiring federal tax credits.
U.S. auto dealers maintained steady confidence in the third quarter of 2025 despite weakening profitability, slower customer traffic, and record-low optimism for electric vehicles, according to the latest Cox Automotive Dealer Sentiment Index (CADSI).
The survey, conducted from July 22 to Aug. 4 with responses from 891 franchised and independent dealers, reported a current market index of 43. While still below the neutral mark of 50, the score was up one point from the second quarter and consistent with levels seen over the past two years. Franchised dealer sentiment fell slightly to 53, while independent dealers improved to 39.
Looking ahead, the market outlook index rose modestly to 46, supported by stable new-vehicle sales. Franchised dealers expressed stronger expectations at 55, while independents held flat.
Key challenges for dealers in Q3 included customer traffic, profitability, and rising costs. The traffic index fell to 33 after a spring surge, marking a significant drop for franchised stores, while profitability declined to 38 overall. Operating costs remained a top concern, with the cost index steady at 70, the highest recorded in the survey.
Inventory levels rebounded sharply in Q3, rising to 57 after two quarters of decline. However, this increase coincided with slower sales momentum, reflected in a dip in the new-vehicle sales environment index from 62 to 58. Growing supply also intensified pricing pressure, as the price index climbed to 61, the first increase in a year.
Dealers signaled heightened concern over the electric vehicle segment. Despite strong EV sales in July, expectations for future demand fell to 30, the lowest score on record. The decline reflects widespread uncertainty over the expiration of federal tax credits at the end of September.
Economic conditions and interest rates remained the primary factors limiting business, cited by 44% and 43% of respondents, respectively, though both concerns eased slightly compared to the previous quarter. Political climate and tariff worries also declined in prominence.
