There is a growing divide between auto dealers and car buyers. According to a recent study by Urban Science and The Harris Poll, while many dealers remain optimistic about the current state of the auto market, buyers are showing much more hesitation, particularly around emerging technologies.
The study, based on surveys of more than 3,000 U.S. car buyers and 254 original equipment manufacturer (OEM) dealers, shed light on shifts in attitudes toward affordability, electric vehicles (EVs), artificial intelligence (AI), and dealership operations.
Dealers Optimistic, Consumers Cautious
There has been a significant boost in confidence among auto dealers, with 75 percent reporting that their pathway to growth feels easier now than it did five years ago. This is a significant increase from 2024, where only 44 percent of dealers were confident about the future. The optimism is buoyed by increased investments in technological tools and operational upgrades. This confidence isn’t equally shared by consumers though with much of this hesitation due to affordability concerns.
“Affordability continues to be a top concern across the board, but what’s driving that concern is expanding — from broad economic uncertainty to ownership costs like insurance and service,” said Eric Demont, Global Product Director for Urban Science. “For dealers, that makes understanding what’s truly driving lost leads at the local level — all the more important. In a tight sales environment, visibility of lost leads can give teams the edge they need to adapt and excel.”
Affordability indeed remains the dominant worry, with 64 percent of consumers ranking the cost of vehicles as a top concern. The cost of vehicle insurance also ranked highly with 52 percent listing it as an issue. While concerns about high gas prices and economic factors have waned slightly compared to 2024, the cost of car ownership continues to weigh heavily on the buyer mindset.
Tensions Over Electric Vehicles
Electric vehicles are always a hot topic, with dealers overwhelmingly confident in their future. Nearly 78 percent of dealers indicated plans to increase their focus on EVs, echoing automakers’ continued commitments to expanding EV lineups. However, consumer readiness lags behind these ambitions. Only 16 percent of surveyed auto buyers said EVs meet their needs today, while four in 10 stated a preference for hybrid models as a more practical alternative. Concerns about affordability, charging infrastructure, and compatibility with longer travel needs rank among the leading obstacles to greater EV adoption.
Interestingly, 91 percent of dealers believe most buyers will be ready for EV-only options by 2040, while less than half of buyers agree, with 48 percent either uncertain or rejecting the idea outright. The disconnect underscores the challenge in bridging short-term consumer skepticism with long-term planning.
“Who’s shopping for an EV right now? With more affordable, long-range models slated to hit the market, the EV buyer profile is shifting quickly,” said Carl Matter, Director Of Adtech Performance for Urban Science. “For dealers, manufacturers and agencies, that means rethinking audience parameters as the market evolves and making sure sales and marketing strategies keep pace with who’s actually buying, not who used to be.”
Of course, all of this data was gathered before Congress chose to end EV tax credits. A decision that will surely dampen dealership enthusiasm around electric vehicles. In fact, 33 percent of dealers already said that one of their top concerns moving forward was the availability or reduction of government subsidies for electric vehicles.
Dealerships Adapt, But Perceptions Lag
Traditional dealership models are already adapting to survive in an era of direct-to-consumer (DTC) competition. While 61 percent of dealers believe that traditional operations are optimized for the future, only 37 percent of consumers agree. This 24-point gap, the largest recorded in the study’s history, suggests that while dealerships are introducing back-end efficiencies like AI tools and digital sales solutions, these advancements remain largely invisible to buyers.
Auto buyers still value in-person dealership experiences, with 90 percent expressing a preference for traditional car buying over fully digital processes. Nevertheless, DTC trends are gaining traction, particularly among younger generations. Millennial buyers are the most receptive, with 78 percent finding DTC models appealing, though even this group still emphasizes the importance of test-driving and other hands-on aspects of the car-buying experience. Interestingly, Gen Z is slightly less enthusiastic about DTC options with 70 percent finding the model attractive. A potential generational shift back to in-person experiences to keep an eye on.
AI Adoption Grows, But Trust Declines
The study also highlighted a muddied narrative around artificial intelligence. Dealers are rapidly adopting AI to enhance processes like sales tracking, inventory management, and customer interaction, with 51 percent reporting improved revenue tied to AI adoption. However, consumer trust in AI continues to fall, with fewer buyers viewing tools like chatbots and automated lead responses as helpful in the buying process.
“AI is here to make the auto-buying process more efficient and responsive, but it’s not a substitute for human connection — the foundation for trust in the sales process,” said Dave Karasick, Dealer Business Development Manager for Urban Science. “The real value lies in using AI to support salespeople, freeing them up to focus on what really matters: creating meaningful, lasting relationships with customers.”
Privacy concerns and discomfort with the transparency of AI-driven operations were frequently cited by consumers, indicating the need for careful communication by dealerships. Encouragingly, 81 percent of buyers said they would share personal data with a dealership in exchange for discounts or promotions, suggesting that trust can be regained through value-driven transparency.
Moving Forward
This year’s study underscores the need for better alignment between dealer strategies and buyer adoption. While dealers feel optimistic about integrating new technologies and adapting to market challenges, heightened consumer hesitancy demands targeted efforts to build trust and meet immediate buying needs.
Whether through hybrid vehicle options, enhanced post-sale service, or clearer communication about AI and affordability initiatives, the road ahead depends on addressing these emerging disparities.
Interested in more consumer insights? Digital Dealer Conference & Expo is coming to Mandalay Bay, Las Vegas, NV this October 14-15! Register today and attend our informative sessions on hot topics like customer acquisition and brand loyalty.
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