U.S. auto dealer sentiment has fallen to its lowest point since the height of the global pandemic, as a confluence of economic uncertainty, weak consumer confidence, and rising costs casts a shadow over the industry heading into 2026. The Q4 2025 Cox Automotive Dealer Sentiment Index (CADSI) revealed a significant decline in optimism among both franchised and independent dealers, as many see a challenging road ahead.
A Market in Decline
The current market sentiment index dropped 5 points from the third quarter to 38, a score that indicates more dealers view the market as weak than strong. This marks the lowest index score since the second quarter of 2020. The forward-looking market outlook index also fell, dropping 4 points to 42, reflecting widespread apprehension about the next three months. Even for franchised dealers, who are typically more optimistic, the market outlook score fell below the 50-point threshold to 49—a rare occurrence that has happened only four times in the last five years.
“Dealers are signaling caution as 2025 ends,” said Mark Strand, deputy chief economist at Cox Automotive. “Persistent economic uncertainty and fading consumer confidence are weighing on sentiment. Compared to the rest of the year, the current market feels like it’s running out of gas.”
Dealership Traffic is Down
A key driver of this pessimism is a sharp decline in customer traffic, both in-person and online. The traffic index dropped to 31, with franchised dealers reporting their lowest traffic scores in five years. This slowdown in showroom and website activity is directly impacting the bottom line. The profit index declined to 36, with dealers pointing to rising operational costs and softer consumer demand.
“Parts costs are going up, which means recon prices go up, likely due to tariffs and global economic influences,” said an independent dealer from the Midwest who was quoted in the report. “Additionally, we need to buy and sell more cars to net the same profit levels due to smaller margins on a per vehicle sale basis.”
The sales environment has weakened for both new and used vehicles. For the first time in four years, the new-vehicle sales sentiment index fell below the 50-point threshold to 49, a substantial drop from 58 in the previous quarter. The used-vehicle sales index also declined, with independent dealers expressing particularly low sentiment at 39.
“Consumer confidence is very low,” said an independent dealer from the West. “Higher prices make customers not spend money.”
Inventory is not Moving as Fast
On the inventory front, new-vehicle supply continues to grow, with the index rising to 59. This has led to increased pressure on dealers to lower prices, with the price pressure index climbing to 63. Conversely, used-vehicle inventory remains tight, with dealers struggling to find quality, affordable stock.
“Quality of vehicles that I can sell for under $15K is poor,” said an independent dealer in the Northeast. “People seem to be keeping their cars until they are worn out.”
Compounding these challenges is a notable slump in the electric vehicle (EV) market. Sentiment regarding future EV sales and leasing dropped sharply among franchised dealers. The future EV sales index fell to 24 from 33 in the prior quarter, with many dealers attributing the slowdown to the expiration of federal tax credits.
Dealers Unhappy with the Economy
When asked about the biggest factors holding back their business, dealers overwhelmingly pointed to the broader economy. Fifty-one percent of dealers cited the economy as their top concern, up from 44 percent in Q3. Market conditions, interest rates, and the political climate also ranked high on the list of worries. As dealers navigate these headwinds, the industry is bracing for a difficult winter, with hopes that potential interest-rate relief and a rebound in consumer confidence could bring renewed momentum in 2026.
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