Dealers’ Outlook Subdued

Auto dealers are keeping up a streak of uncertain feelings about their sector that’s stretched for more than two years, with the fall from the pandemic sales highs and the looming uncertainty around this fall’s presidential election giving them a tempered outlook.

Cox Automotive’s third-quarter Dealer Sentiment Index fell from a 42 reading to 40 quarter-over-quarter, down from 45 a year ago.

When broken down between franchised and independent dealers, though, the polling showed a slight increase of one point to the 50-point mark on the part of franchised owners.

That’s in sharp contrast to independent dealers’ 37, their second-lowest reading in the survey’s history after the 17 recorded in the depths of the pandemic shutdown in the second quarter of 2020.

Narrowing down to dealers’ outlook on the market three months down the road, the sentiment score fell from 44 to 42, also down from 45 year-over-year. Cox said that indicates most anticipate the market to weaken.

Meanwhile, its index on the cost of doing business hit a record high of 77, signaling dealers think the cost will increase and their profits therefore fall.

“… the profitability index has generally declined for three straight years, particularly for independent dealers,” said Chief Economist Jonathan Smoke in a press release. “Most dealers feel their profitability picture is weak, and that is likely impacting many sentiment measures, dragging the overall survey scores lower.”

Franchised and independents aligned on Cox’s price pressure index, which reads 66, indicating they feel pressured to lower vehicle prices.