The Q4 2024 Cox Automotive Dealer Sentiment Index (CADSI) revealed a shift in dealer outlook. Throughout 2024, political uncertainty surrounding the U.S. presidential election dampened dealer optimism. Jonathan Smoke, chief economist at Cox Automotive, notes that with the election resolved and the possibility of supportive measures like tax rebates and lower interest rates, dealers are more hopeful about future market conditions.
The market outlook index surged from 42 in Q3 to 54 in Q4, marking its highest increase in CADSI history. This rise reflects a growing belief that the market will improve within the next three months. While better than last year, the current market index score of 42 shows that most dealers still view the market as weak, remaining below pre-pandemic levels.
Franchise dealers who sell new and used vehicles have a more optimistic outlook, with an average score of 50. Independent dealers, who only sell used cars, are more pessimistic, with a low score of 39.
In Q4, the profit index rose slightly from 34 to 35, indicating that profits are improving but still below 2021 and 2022 levels. Similarly, the cost index fell from 77 to 71, showing some relief from cost pressures.
Sales conditions show slight improvements, with the new-vehicle sales index rising from 51 to 54. New-vehicle inventory remains strong with an index score of 73, while used-vehicle sales rose slightly, from 43 to 44, and used-vehicle inventory increased from 40 to 45.
However, customer traffic remains weak, with the Customer Traffic Index declining from 32 to 31. Digital traffic rose slightly, from 39 to 40, but overall foot traffic is still a concern.
Incentives remained steady, with the Incentive Index holding at 37. Dealers also saw a slight decrease in price pressure, from 66 to 63. Electric vehicle (EV) outlook remains mixed, with dealers’ outlook essentially unchanged from Q3 and the overall EV sentiment index at 43.
The economy remains the top concern, cited by 56% of dealers, followed by interest rates at 52%. Market conditions and political climate also rank high on the list of growth barriers.
Overall, while dealer sentiment has improved, challenges persist. The shift in outlook is driven by political resolution and expectations for supportive economic measures. Still, dealers remain cautious due to cost pressures, weak customer traffic, and mixed EV sentiment.
