Dive Brief:
- The latest Cox Automotive Dealer Sentiment Index released on Sept. 8 found that sentiment weakened modestly in the third quarter, largely due to current market conditions.
- The report cites ongoing affordability challenges, rising inflation and interest rates, as well as broader economic uncertainty that continues to weigh on the U.S. auto market, for the decline.
- “Dealers are seeing a market that remains resilient but increasingly difficult for consumers to navigate,” said Mark Strand, deputy chief economist at Cox Automotive, in a statement.
Dive Insight:
The Q3 Automotive Dealer Sentiment Index survey was conducted between July 22 and Aug. 5. Cox Automotive surveyed 929 U.S. dealers, 501 of which were franchised and the rest independent.
The most indicative deterioration among dealers was the new-vehicle sales sentiment, which fell to the neutral threshold of 50, down from 58 from Q3 a year ago and 53 in Q2. According to Cox Automotive, an index score higher than 50 indicates that more dealers view current market conditions as strong or positive rather than weak or uncertain.
Dealers surveyed cited reduced consumer spending as a result of inflation and higher borrowing costs that led some price-conscious car shoppers to put off large vehicle purchases.
The current market sentiment index declined to 41 from 43 in Q2, second quarter, with both franchised and independent dealers reporting less favorable conditions. Cox Automotive said that this particular index has remained below 50 since mid-2022. Among franchised dealers, the current market sentiment fell 4 points to 49 from 53 one year ago. Independent dealers remained more pessimistic than franchised dealers, the survey found.
According to the survey, dealers cited reduced consumer spending as a result of inflation and higher borrowing costs that led some price-conscious car shoppers to put off large vehicle purchases.
New-vehicle prices are hovering near $50,000 and reached the highest prices of the year in July, according to Kelley Blue Book data. While affordability remains a concern, rising prices have also led to a rise in Cox Automotive’s profit index, which it said was driven largely by independent dealers.
“Affordability continues to shape demand, with high interest rates and sustained inflation pressures on households keeping shoppers focused on monthly payments and lower-priced vehicles,” said Strand.
In January, Cox Automotive issued its 2026 U.S. new-vehicle sales forecast calling for sales of 15.8 million units — down 2.4% compared to an estimated 16.2 million vehicles in 2025. The primary factor for the decline is the lack of affordability, its analysts said at the time.
Still, customer traffic at dealers remains near historic norms, per the survey. Although this index declined 2 points to 34 in Q2, it was higher than a year ago and near the long-term average of 36. Franchised dealers also reported softer online activity and a decline of in-person traffic, while in-person traffic remained steady among independent dealers.
Cox Automotive noted that many dealers it surveyed expect that customer traffic will improve in the fall selling season as new models arrive at dealer showrooms and inventory improves for some models, such as the Toyota RAV4, which remains in high-demand this summer amid tight supply.
As of Q3, the biggest factor impacting dealer sentiment was the economy, with 54% of dealers saying that current economic conditions are holding back their business — up from 44% a year ago. The second largest factor is market conditions (42%), followed by interest rates (34%), expenses (33%) and the current political climate (32%).
