Inside the CDG Q4 2025 Dealer Outlook Survey—and what it signals for 2026

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Welcome to the Market Pulse—your no-fluff cheatsheet to auto retail, built to help dealers price right, stock smart, and stay ahead.

Vehicle affordability is holding as dealers’ top concern: Affordability was ranked #1 more often than any individual cost or policy factor affecting pricing, including rates, tariffs, or OEM programs.
Margin pressure is reducing dealers’ ability to manage affordability: Thinner front-end and F&I grosses, higher recon costs, and slower turns are limiting payment flexibility.
M&A demand is accelerating while supply is drying up: Only 10% of owners show interest in selling, while 44% are actively pursuing acquisitions, creating a 4.3-to-1 buyer imbalance.

(Source: CDG Q4 2025 Dealer Outlook Survey)

Dealers are signaling that affordability will cap unit volume beyond 2025.

In analyzing responses to the CDG Q4 2025 Dealer Outlook Survey, we mostly confirmed what just about every dealer has been talking about all year, online and behind closed doors.

2025 threw plenty at the industry: EV incentives faded, tariff policies were announced, walked back, and revised again, and rates stayed higher for longer than expected.

None of that surprised dealers.

But what did come through clearly in the survey is how those factors are now being bundled together.

The findings: Rather than treating rates, tariffs, or OEM programs as separate problems, dealers consistently pointed to the same end result — fewer customers comfortably qualifying at today’s transaction prices.

NOTE TO DEALERS:

If affordability is the outcome dealers are worried about, margin is the mechanism making it harder to manage.

What we mean:

Thinner front-end and F&I grosses leave less room to structure deals around payment without eroding profitability.
Rising recon and holding costs punish slow turns, forcing sharper pricing decisions earlier in the lifecycle.

Margin pressure limits flexibility. And the stores that adapt fastest by controlling costs, tightening turns, and protecting usable gross will have more ways to keep deals together for payment-sensitive buyers heading into 2026.

Buy-side demand is accelerating, with buyers focusing on a narrow set of franchises.

Against the backdrop of tighter margins and payment sensitivity, acquisition appetite is growing more uneven by the quarter.

Per the survey: Only about 10% of respondents expressed meaningful interest in selling. Meanwhile, 44% of dealers said they are actively pursuing acquisitions in the next 12–24 months, many with capital partners, floorplan commitments, and internal deal teams already in place.

That imbalance works out to roughly 4.3 aggressive buyers for every 1 realistic seller.

That scarcity, however, isn’t evenly distributed.

When dealers were asked which franchises they most want to own, Toyota and Lexus stood far apart from the rest, earning mentions from nearly 80% of respondents, which is more than the next four brands combined.

Check it out…

Honda/Acura and Honda/Acura formed a distant second tier, while many domestic and European franchises barely showed up in responses at all.

WHY IT MATTERS:

There are two sides to every coin.

On one side, capital is flowing toward brands that help dealers manage affordability, protect margin, and generate predictable showroom traffic.

On the other, some buyers are intentionally leaning into less stable franchises, betting that lower entry prices today will translate into outsized returns down the road.

Both paths can work. But they require very different balance sheets, operating playbooks, and patience.

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Reading through this quarter’s survey responses, one thing was clear. The way dealers are talking about affordability, buy-sell decisions, and day-to-day pressure closely mirrors conversations we’ve been having all year on the CDG Podcast about how to operate and grow in a tighter market.

Knowing this, here are three perspectives that fit this moment.

Do: Invest in operational capacity, not just cost-cutting.

Katelyn Gilmore, General Manager of Paradise Chevrolet Cadillac, runs one of the highest-volume Chevy stores in the country and has seen firsthand that margin pressure can’t be solved by trimming headcount alone.

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“You can never save your way into a profit… If you have the right people, in the right positions, even if you’re a little heavy, it still translates to you make more money.”

Katelyn Gilmore

That’s why Paradise carries more managers and technicians than many peers, but creates throughput, accountability, and consistency, not bloat.

That same margin reality is shaping how dealers think about what to buy next.

Do: Match your acquisition strategy to a realistic ownership horizon.

Jim Keffer, CEO of Keffer Auto Group, has been open about why not every “premium” franchise works under a traditional buy-and-hold model anymore.

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"I still remember when my dad passed on the Toyota store in Charlotte many years ago because he thought $2 million was way too much goodwill,” he said.

Jim Keffer

In hindsight, that store would be worth well over $100 million today, making a 10-year buyout unrealistic for most operators.

The signal: Entry price and time horizon matter as much as brand prestige.

Do: Treat OEM alignment as an affordability strategy, not a politics issue.

In another episode, Joseph J. Agresta, Jr., Dealer Board Chair for Mercedes-Benz USA and President of Benzel-Busch Motor Car, reminds us that some affordability challenges sit beyond the four walls of the store.

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“I don't think that there is any model that works where the manufacturer wins and the dealer loses, or the dealer wins and the manufacturer loses. That can't work long term."

Joseph Agresta, Jr.

For example, financing costs have become a bigger payment driver than MSRP increases. And the jump from near-zero rates to roughly 7% has added more to monthly payments than most vehicle price inflation, especially in luxury segments.

His POV: Dealers can’t solve affordability in isolation. Incentives, subventions, lead flow, and digital handoffs only work when OEMs and dealers are aligned.

Flexibility is earned, not given. And 2026 is going to make that obvious.

Affordability isn’t loosening, margins aren’t expanding, and the stores that feel “stuck” next year will be the ones still waiting for external relief.

On the flip side, the stores that feel nimble will be the ones that built it through faster turns, cleaner operations, stronger fixed-ops pull-through, and growth strategies that actually fit their balance sheets.

Here’s my question: Where does your flexibility come from today?

If the answer is incentives, cheap money, or hoping demand bails you out, that’s fragile. If it’s process, discipline, and optionality, that compounds.