Auto dealers’ market outlook took a hit in Cox Automotive’s latest sentiment index as more foresee weakened business after two quarters on the upswing.
Though franchised dealers indicated retail conditions have improved with the recent sales surge, franchised and independent dealer sentiment for the coming quarter declined significantly.
The biggest factor affecting outlook is the U.S. economy, which 51% of the nearly 1,000 surveyed dealers listed as holding back business the most, eclipsing interest rates. Those were followed by market conditions in third place, political climate in fourth, and tariffs on imported vehicles and parts in fifth.
“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, and the market could be a lot more hair-raising in the months ahead,” said Cox Chief Economist Jonathan Smoke.
The second-quarter temperature reading from a national survey conducted an April 22 to May 5 showed more dealers viewed the current market as weak than strong, the quarter-over-quarter index score down two points to 42. Franchised dealers alone considered conditions improved, bringing up their index reading two points to 56.
The coming quarter is another matter, Cox’s market outlook index fallling from 58 to 45 as dealers considered how near-term conditions might develop. Franchised dealers’ expectations alone fell five points to 56.
The future-looking electric-vehicle sales index, meanwhile, fell to 37, its lowest point since Cox added it in 2021.
When assessing first-quarter conditions, dealers reported customer traffic and profit improvements. Franchised dealers raised the in-person traffic index 10 points as consumers rushed to stores to beat tariff price effects. Their profit index rose 11 points as inventory fell and they felt less impetus to lower prices.
