Chief Economist Jonathan Smoke breaks down findings from Cox Automotive’s Q2 Dealer Sentiment Index

Cox Automotive released its Q2 Dealer Sentiment Index, which provides a current view of dealer sentiment and looks ahead to the next 90 days. The study reveals that COVID concerns are mostly in the past, but inflation, high costs, and low inventory continue to challenge dealers. Today on Inside Automotive, we’re pleased to welcome Jonathan Smoke, Chief Economist at Cox Automotive, to further discuss the Q2 Dealer Sentiment Index.

We all know there has been a lot of disruption in the auto market over the past several quarters. The overall sentiment of U.S. auto dealers in Q2 was good but declining, especially among independent dealers. The decline from the first to the second quarter was slightly more significant than usual for the season. There is seasonality to sentiment, and dealers are often the most positive at the beginning of the year and spring. However, the scores overall remained above the critical 50 threshold, meaning more dealers than not consider the market to be strong.

Dealers are amazingly resilient and seem to find ways to adapt to changing market conditions. Inventory remains the top issue amongst the dealer body when it comes to factors holding back business. However, dealers are very resourceful when it comes to sourcing inventory.

Another trend Smoke is watching closely is declining dealer views of credit conditions. The index findings didn’t show that it is a problem, but it is moving in the wrong direction. If this is the start of a negative trend, it could reveal more challenges down the road. Additionally, car dealers are less optimistic about the future than the current climate.

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