Dealer sentiment has weakened modestly in the third quarter, with new-vehicle sales sentiment falling to 50 — the neutral threshold — as affordability pressures, inflation, elevated interest rates and economic uncertainty continued to weigh on the market, according to the Cox Automotive Dealer Sentiment Index.

The current market index declined to 41 from 43 in the second quarter, its lowest reading since a sub-50 run that began in mid-2022. Franchised dealer sentiment is down four points to 49; independent dealers remain more pessimistic at 43.

The economy was the most frequently cited factor holding back dealership business, selected by 54% of dealers, followed by market conditions (42%), interest rates (34%), expenses (33%) and the political climate (32%). The survey follows a hit-and-miss August sales report propped up by hybrid and fleet sales.

“Dealers are seeing a market that remains resilient but increasingly difficult for consumers to navigate,” writes Mark Strand, deputy chief economist at Cox Automotive, in a release. “Affordability continues to shape demand, with high interest rates and sustained inflation pressures on households keeping shoppers focused on monthly payments and lower-priced vehicles.”

On the positive side, Cox’s profit index rose to 39, its second consecutive quarterly improvement, and EV sales sentiment posted its second consecutive quarterly gain, rising one point to 41. Dealers also reported difficulty sourcing quality used vehicles priced below $20,000, and many expect traffic to improve during the fall selling season as new models arrive.

Read the full report at Cox Automotive