In the latest episode of Inside Automotive, Erin Keating, Senior Director of Economic and Industry Insights at Cox Automotive, shares her expert analysis of the Q3 Cox Automotive Dealer Sentiment Index. With 933 dealers surveyed across the U.S., the results reveal growing uncertainty in the automotive industry, particularly among independent dealers grappling with rising costs, inventory struggles, and market pressures. As franchise dealers see a slight uptick in sentiment, independents are feeling the squeeze. Erin sheds light on the regional disparities, political concerns, and evolving dynamics that are shaping the outlook for Q4.
Key Takeaways
1. The Q3 Cox Automotive Dealer Sentiment Index revealed an overall sentiment score of 40, significantly below the average of 50. Keating remarked that this was “not great,” although the score was compiled based on a lot of uncertainty in the market. Independent dealers were particularly pessimistic, with their sentiment dropping to 37, the second-lowest in the survey’s history.
2. In contrast to the decline among independent dealers, franchise dealers experienced a slight increase in their sentiment, rising to 49. Strong fixed operations primarily drive this stability, as more consumers hold on to their vehicles and require repairs.
3. Additionally, the report underscores that the U.S. automotive market is deeply regional. Dealers in the Western region, for example, are dealing with higher costs of living and increasing unemployment, leading to more pessimistic outlooks. Meanwhile, some areas like the Northeast are seeing more positive responses.
4. Moreover, the political environment, driven by the upcoming election season, is a major concern for dealers. Many believe the uncertain political climate will impact vehicle prices and inventory, with high interest rates and economic instability further amplifying these worries.
5. While EV sales are increasing, Keating notes that dealers remain hesitant about the future of the EV market. Many respondents expect continued slow growth and are uncertain about how political factors, such as changes in tax credits, may affect EV demand.
“A lot of dealers, both franchise and independent, are telling us that prices are increasing, costs are going up, and traffic is down for independents. It’s really a tough time, and those factors are definitely weighing on their outlook.” – Erin Keating.
