Cox Automotive unveiled its first quarter dealer sentiment index (CADSI), which reported a sudden shift towards optimism after the end of Q4.
Although retailers continued to say that the car market is at its weakest point since 2020, outlooks on the upcoming quarter were 11 points higher than in December, the first positive change since Q1 of last year.
Despite the change in attitude, overall scores still declined year-over-year, as dealers recorded declining profits and near record-breaking operating cost. To illustrate, the overall profit index decreased to 42 from 44 the previous quarter and from 54 a year ago. Particularly for franchised dealers, the profit index hit record highs in late 2021 and the beginning of 2022. Nevertheless, it has since fallen for six consecutive quarters. Franchised dealers continue to support the profit index despite the fact that it is currently well below the 50-point mark because they feel profits are still particularly good at 63. Conversely, independent dealers currently view earnings as weak, scoring only 36 on the index.
On the other hand, The new-vehicle inventory mix index has also been rising, rising from 41 in Q4 to the threshold of 50 in Q1 2023. This indicates that dealers’ opinions of the current mix are broadly neutral, with half of them stating that it is good and the other half that it is poor.
Likewise, the used-car inventory index increased in Q1 2023, rising 7 points year over year and 1 point from the previous quarter to 43. The independent dealer index increased by 7 points from the previous year to 40.
Based on 1,022 U.S. auto dealer responses, including 571 franchised dealers and 451 independents, the Q1 2023 CADSI was released. The survey took place between January 30 and February 13, 2023. To accurately represent the nationwide dealer population, dealer responses were weighted by dealership type and sales volume. Respondents are given a choice relating to strong/increasing, average/stable, or weak/decreasing for each area of the market studied.