While the first Cox Automotive Dealer Sentiment Index (CADSI) of 2025 showed a slight improvement in the first quarter compared to the fourth quarter of 2024, the survey was conducted before President Donald Trump’s tariff plan was announced.
The U.S. automobile dealers’ view of current market conditions in the first quarter of 2025 increased to 44 from an index score of 42 in Q4 2024. Franchised automobile dealers had a positive outlook with a score of 54, rising four points from last quarter and a score of 49 a year ago. But independent dealers rated the current market as weak with a score of 42.
While the current market index score increased year-over-year, Cox analysts noted the remains below the threshold of 50 that indicates more dealers view the market as weak rather than strong.
Market Outlook Highest Since 2022
The market outlook index rose for the second consecutive quarter to 58, its highest score since 2022, that indicated more dealers were anticipating a strong market in the next three months. But Jonathan Smoke, Cox Automotive chief economist, noted that outlook may be different if taken today.
“At the time of this survey, U.S. automobile dealers were feeling pretty good about the market,” said Smoke in a statement released with quarterly report. “A combination of positive factors has been working in the dealers’ favor – inventory is healthy, and consumers have some urgency to buy. At least as we head into spring, conditions are favorable.”
“However, considering the administration’s current and shifting tariff stance, how long this momentum will last is unclear.”
Economy Concerns Remain
Before the tariffs unsettled the market, dealers viewed the U.S. economy as weak rather than strong. The current index score is 42, slightly improving from the previous quarter but much lower than pre-pandemic levels. Just before the pandemic in Q1 2020, the score was 57.
Interest rates continue to be a major concern, as 52 percent of dealers noted they were holding back business. The economy dropped to second on the list, mentioned by 45 percent of dealers but down significantly from 56 percent in Q4 and 55 percent a year earlier. Market conditions (36 percent), expenses (29 percent) and consumer confidence (26 percent) round out the top five factors.
The profit index for dealers dropped a point to 34 from last quarter, just one point above the all-time low of 33 in that was recorded a year earlier. The cost index held steady quarter-over-quarter at 71. But dealers reported despite being unchanged and lower than year-ago levels (73), they indicated that the cost of running their business is growing.
New, Used Vehicle Sales
Franchised automobile dealers reported a good sales environment during the survey. The Q1 new-vehicle sales index remained at 54, higher than last year’s 52. At the same time, the new-vehicle inventory index fell sharply to 63 from last quarter’s 73, the second-highest point ever ( 75 in Q1 2024).
As for used-vehicle, the sales index rose for the fifth consecutive quarter to 45 in Q1, up one point from the last quarter and five points higher than a year ago. Franchised dealers rated the market better than independent dealers, with an index of 58 in Q1 compared to 41 from independent dealers.
The used-vehicle inventory index improved for the second straight quarter to 47. Franchised dealers have reported an increase in used inventory, reflected by an index score of 55. Independent dealers are facing greater inventory challenges, as indicated by an index score of 45. The mix of used-vehicle inventory at the time of the survey was good, according to both franchised and independent dealers. The score of 58 is higher than year-ago levels and above last quarter.
Smoke: Better then a Year Ago
As an overview, Smoke noted a theme that continues through all of the findings is that the first quarter is better than a year ago.
“Even though we have some risks about the future, and it’s not exactly a straightforward bet for improvement by dealers, the sentiment at the time of this survey was certainly more positive than it was a year ago,” he said.
