Dealer outlook remained steady in Q3 in the thick of economic uncertainty even with profitability and customer traffic taking a turn downward, according to Cox Automotive.
First things first: Cox’s latest dealer sentiment index study, drawn from a survey of 891 franchised and independent dealers from July 22 to Aug. 4 reveals that the dealer sentiment index ticked up one point to 42 from Q2.
Franchised dealer sentiment dipped from 56 points to 53.
But increased from 37 to 39 for independent dealers.
What they’re saying: “With sales momentum mostly holding, dealers are not throwing in the towel on sentiment,” noted Jonathan Smoke, chief economist at Cox Automotive. “New-vehicle sales have come down from the surge in the spring but have remained relatively strong and better than the past few years.”
Zooming in: Dealer market outlook for the coming three months rose positively to 46 on the index—despite consumer traffic slowing sharply as costs remain relatively high.
Optimism around consumer traffic fell from 37 in Q2 to 33 in Q3.
And profitability expectations dipped slightly in Q3, falling from 39 to 38, while the cost expectations remained flat at about 70–indicating a lot of concern over rising operating expenses.
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Between the lines: Dealers also expect new vehicle inventory to increase along with pricing pressure—reflective of slower sales among both franchised and independent dealers.
Digging deeper: Economic and market concerns continue to weigh heavily on dealers, with the economy topping the list—while political and tariff worries appear to be easing.
44% said the economy was “holding back business” in Q3, down from Q2.
43% of dealers cited interest rates as a major concern, nearly even with Q2.
36% of those surveyed by Cox indicated that the market affected their business.
28% noted the political climate as an issue in Q3, and 16% worried about tariffs.
Also worth noting: Dealer outlook for EVs dropped to 30, a record low—amid concerns about the impact that the elimination of the federal EV tax credit in September will have on the sector.
What they’re saying: “While the labor market has softened, unemployment remains historically low, and, for the most part, tariffs have only been a glancing blow to consumer wallets so far,” said Smoke. “While 2025 has been a roller coaster for many, the market is still generally on track.”
Bottom line: Despite clear challenges, dealer outlook hasn’t collapsed—signaling that retailers are bracing for industry headwinds but not panicking, while making the necessary adjustments to their operations.
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