U.S. auto dealers see market weakness driven by inflation, economic anxiety, and tight inventory. - IMAGE: Cox Automotive

U.S. auto dealers see market weakness driven by inflation, economic anxiety, and tight inventory.

COX AUTOMOTIVE – U.S. automobile dealer sentiment in Q3 2022 reflects that more dealers view the current market as weak than strong. Now, at 49, the current market index is below the threshold of 50 in the Cox Automotive Dealer Sentiment Index (CADSI), marking the fifth quarter-over-quarter decline in overall market sentiment. The index is down five points from Q2 and down 13 points year over year. The current market index was last below 50 in Q1 2021; it peaked at 67 in Q2 2021. U.S. auto dealers indicate that their negative view of the market is influenced by inflation, economic anxiety, and tight inventory.

The 3-month, forward-looking market outlook index dropped sharply from the previous quarter and, at 44, is at a record low for the index, back to levels last seen at the onset of the pandemic in Q2 2020 and well below the 60 recorded in Q3 2021. The quarter-over-quarter decrease in market outlook, however, was driven more by independent dealers, with a 10-point drop to 40, equal to the lowest level last recorded at the start of the pandemic. Franchised dealers’ outlook was also down quarter over quarter but by only five points.

“Importantly, a drop in current-market sentiment is not typical in the third quarter,” said Cox Automotive Chief Economist Jonathan Smoke. “The third quarter is usually mostly stable and, for franchised dealers, is often improving. There is typically excitement building with new models rolling out and energy for the new-vehicle market through the fourth quarter and holiday seasons. That is just not the case this year.”

The Q3 2022 CADSI research was in market from July 26 to Aug. 9, 2022, when inflation was subsiding slightly from the 40-year high in June and the Fed was raising rates again while promising more rate hikes.

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Originally posted on F&I and Showroom

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