Dealers grow less confident
- Franchised dealership leaders reported a weaker industry outlook in Q1 amid war, gas price, and inventory worries. - Separately, roughly 20% of recent buyers now face monthly auto payments above $1,000, signaling affordability strain. - Softer dealer confidence combined with stretched buyer payments increases pressure on approvals, dealer funding, and programme rules ( ).
U.S. car dealers entered spring 2026 less sure about the market, even after the usual seasonal lift in first-quarter sentiment. (coxautoinc.com) Cox Automotive’s Dealer Sentiment Index rose to 41 in the first quarter from 38 in late 2025, but it stayed below 50, the line between negative and positive readings. Franchised dealers, the group tied most directly to new-vehicle sales, posted a current-market reading of 48. (coxautoinc.com) Dealers reported weaker showroom traffic and profits at the same time. Cox said the traffic index fell to 28, matching a pandemic-era low last seen in the first quarter of 2021, while the profit index dropped four points to 32. (coxautoinc.com) That caution is colliding with buyers who are already stretching to make deals work. Edmunds said 20.3% of financed new-vehicle purchases in the fourth quarter of 2025 carried monthly payments of at least $1,000, up from 19.1% in the third quarter and 18.9% a year earlier. (edmunds.com) The strain runs deeper than the headline figure. Edmunds said the average monthly payment on a financed new vehicle hit a record $772 in the fourth quarter, the average amount financed reached $43,759, and 84-month loans made up 20.8% of financed new-car purchases. (edmunds.com) For dealers, those numbers shape what gets approved and what gets funded. When payments rise faster than incomes, more deals depend on longer terms, thinner lender margins, or stronger credit files, and Cox said affordability was already weighing on dealer performance in the first quarter. (coxautoinc.com; edmunds.com)) The credit backdrop has also become less forgiving. The Federal Reserve Bank of New York said auto loan balances rose to $1.66 trillion in the fourth quarter of 2025 and that aggregate delinquency rates worsened, while outside data series based on the New York Fed report put 90-day-plus auto delinquency at 5.21% in December 2025. (newyorkfed.org; ycharts.com)) That leaves retailers managing both sides of the sale at once: inventory on the lot and credit risk in the contract. Cox said new-vehicle inventory growth slowed to 56 and used inventory stayed tight at 45, while new-vehicle sales sentiment remained below 50 for a second straight quarter, the first such stretch since the survey began in 2017. (coxautoinc.com) Franchised dealers still run a huge business even in a softer market. The National Automobile Dealers Association said the U.S. had 16,990 franchised light-vehicle dealers in 2025, with total dealership sales above $1.3 trillion. (nada.org) The next test is whether spring demand can offset the math of higher payments and weaker traffic. Cox said dealers are looking for lower rates and stronger consumer confidence; for now, the first quarter showed hope for the months ahead, not relief in the market they were already facing. (coxautoinc.com)
