ATLANTA — According to data from the Q3 2018 Cox Automotive Dealer Sentiment Index, U.S. automobile dealers are more positive than negative in describing the current market in the third quarter but are fearful that proposed auto tariffs could hurt profitability. The results are based on a poll of 1,276 dealer respondents conducted from July 31 to August 18.

Only 11% of dealers believe auto tariffs on imported vehicles and parts would have a positive impact on their business, while 38% anticipate a negative impact. Fifty-one percent of dealers believe tariffs would have no impact. Franchised auto dealers are more pessimistic, with 56% suggesting new auto tariffs would impact their business negatively. Of the franchised dealers who feel negatively toward tariffs, 66% believe consumers will face higher prices on all new vehicles, not solely imports, as the market adjusts.

“Dealers continue to report strong market conditions in the third quarter, with few material changes in key performance indicators from the spring, when we reported record-high sentiment,” said Cox Automotive Chief Economist Jonathan Smoke. “While they are positive on today’s business, the new looming threat is the negative impact of proposed tariffs on imported autos and parts. And, for the first time, dealers indicate that limited inventory is the No. 1 obstacle holding back business.”

Derived from a survey Cox Automotive issues to a representative sample of franchised and independent auto dealers, the CADSI measures U.S. dealer perceptions of current retail auto sales and sales expectations for the next three months as “strong,” “average,” or “weak.” The quarterly survey also asks dealers to rate new-car sales and used-car sales separately, with a variety of key drivers including consumer traffic and inventory levels. Responses are used to calculate an index where any number over 50 indicates that more dealers view conditions as strong rather than weak. In the Q3 2018 survey, Cox Automotive also explored dealer expectations on the impact of proposed auto import tariffs on business profitability.

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