What are the top challenges facing car dealers in 2023? — Jonathan Smoke | Cox Automotive

It has been predicted that the rest of the year will witness similar movements based on the changes the car industry has already experienced, such as inventory changes, high pricing, inflation, and the introduction of electric vehicles. Today’s Inside Automotive features a discussion with Cox Automotive’s Jonathan Smoke, Chief Economist, on the trends that dealers will see continue into the year. 

Smoke believes that “last year set dealers up for strong profit margins.” However, used car retail will continue to face significant difficulties throughout the rest of 2023. Because affordability and the lack of new vehicles had an impact on supply and demand, Smoke forecasts that, “although inventory will keep growing, pre-pandemic supply levels won’t return.”

Dealers have a chance to roll with the punches in the market for new vehicles and fixed operations. Smoke asserts that “they have the potential to outperform what the market offers them.”

While he is not overly hopeful about interest rates falling, he is sure that the industry will peak in the first half of this year. As normal depreciation values increase, more opportunities to buy will arise. Smoke is confident that if the second half of the year is able to avoid a recession, then the end of 2023 will finish on a more positive note than how 2022 finished.

According to Smoke, increased supply constraints will occur over the next few years as a result of electrification trends, persistent problems with the global supply chain, and manufacturers’ efforts to become less globally dependent. 

Customers will become accustomed to the fact that their cars won’t depreciate over the coming years, and some reports revealed to Smoke that certain present loans are generating equity despite the dips the industry experienced in 2022.

Smoke proposes that dealers are well-prepared for any icebergs that may appear in the remaining months of 2023.

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