ATLANTA — According to the Q4 2019 Cox Automotive Dealer Sentiment Index, U.S. automobile dealers continue to view the current market as negative, with an index score of 47. The slight decrease from Q3’s current market index of 48 was not statistically significant.
The index reading of 47 indicates that slightly more dealers feel that the current market is weak compared to the number who feel the current market is strong.
As the CADSI has consistently demonstrated, the current market sentiment skews more positive for franchised auto dealers, operations that sell both new and used vehicles, compared to independent dealers, those who focus only on used-vehicle sales, analysts noted.
The gap narrowed this quarter, however, as franchised dealers became less positive — decreasing from 56 in Q3 to 51 in Q4 — while independent dealers remained negative at 46, unchanged from Q3.
“The fourth quarter seems to be revealing an important turning point for dealer sentiment especially compared to this time last year when views of the future dimmed,” said Cox Automotive Chief Economist Jonathan Smoke. “Independents are more optimistic about the next 90 days, and that improvement is related to increasing used-vehicle inventory. Franchises have similar positive views of the future as they did at the end 2018. However, dealers remain concerned about the economy as well as the usual seasonal decline that impacts parts of the country more severely than others.”
When asked about factors holding back the business, dealers in aggregate remained fairly consistent in Q4, although “economy” entered the top five and pushed “expenses” to the sixth spot.
When it comes to views of the future, franchised and independent dealers moved closer together in Q4. Franchised dealers’ sentiment scored 54, down from 57 in Q3, while independents’ sentiment increased from 49 to 51, an improvement that is likely driven by to growing used-vehicle inventory as well as increasing profits.
The overall future index score of 51 in Q4 is better than last year and equal to Q3, signaling a better end to 2019 and sustainable opportunities expected in the used-vehicle market, according to Smoke.
When asked about factors holding back the business, dealers in aggregate remained fairly consistent in Q4, although “economy” entered the top five and pushed “expenses” to the sixth spot. “Market conditions” remained in the top spot as the most cited negative factor for both groups. “Competition” stayed in second place for both as well.
Originally posted on Auto Dealer Today