Cox Automotive estimated February used-car sales made “the largest jump seen in recent years.”

And the used-vehicle sales index segment of the Cox Automotive’s Q1 2025 Dealer Sentiment Index (CADSI) improved for the fifth straight quarter.

But participating franchised and independent dealers still see two important factors holding back their operations. According to the CADSI, they include interest rates and the economy.

In the latest survey, 52% of dealers noted interest rates were holding back business, unchanged from Q4 2024 but down from 62% a year ago.

Cox Automotive found that the economy dropped to No. 2 on the list, mentioned by 45% of dealers, down significantly from 56% in Q4 and 55% a year earlier.

“Over the past year, the view of the economy has remained stable but is much lower than pre-pandemic levels,” Cox Automotive said in a news release, noting that the current index score is 42, “indicating most dealers feel the economy is weak.”

That’s compared to a score of 57 just before the pandemic in Q1 2020, “when it was considered strong,” Cox Automotive said.

Researchers determined market conditions remained in the third spot at 36%, down from 40% in Q1 of last year.

Expenses (29%) and consumer confidence (26%) rounded out the top five factors.

Despite those headwinds, the used-vehicle sales index rose to 45 in Q1, up 1 point from Q4 and 5 points higher than a year ago. Cox Automotive highlighted this movement marked the fifth consecutive quarter of improvement for this portion of the CADSI.

Researchers noticed franchised dealers rated the market better than independent dealers, with an index of 58 in Q1, up from 51 a year ago, indicating most see the market as good.

With an index score of 41, Cox Automotive said independent dealers view the used-vehicle sales environment as challenging.

But researchers pointed out the index score for independent dealers has been improving steadily for over a year, as 12 months ago, the index score was 36, which was close to the all-time low of 35 (excluding Q2 2020 when it fell to 20).

Cox Automotive went on to mention the used-vehicle inventory index improved for the second straight quarter.

With a score of 47, researchers explained that more dealers perceive used-vehicle inventory as decreasing rather than increasing.

Cox Automotive added franchised dealers have reported an increase in used inventory, reflected by an index score of 55. In contrast, independent dealers are facing greater inventory challenges, as indicated by an index score of 45, according to the survey.

“The mix of used-vehicle inventory at the time of the survey was good, according to both franchised and independent dealers. The score of 58 is higher than year-ago levels and above last quarter,” researchers said.