Dealerships are less confident than ever about the car market, according to a new report released by Cox Automotive.
The study, which obtains quarterly data on dealer sentiments, surveyed roughly 1,000 auto-retailers throughout the U.S., including both franchised and independent locations. In addition to current and predicted market performance, Cox also asked participants to name the main issues impacting their business performance.
The results revealed the lowest expectations for growth since 2017, with an even more negative outlook than during the 2020 economic shutdown. This is in line with other industry reports, which showed declining sales for most car brands since the end of 2021. Dealers cited poor economic performance and high interest rates in their results. The rate hikes set by the Federal Reserve resulted in higher monthly payments for drivers. This, combined with layoffs and recession anxieties, have seemingly led many consumers to pause vehicle purchases. While full sales numbers have yet to be released for the fourth quarter, Cox did expect new-car sales in November to improve over last year.
However, while dealerships expectations are much lower than last year, there are still some areas of improvement. At the end of 2021, supply chain restrictions made it extremely difficult for dealers to maintain inventory, leading to low supply and high price tags. While shortages still abound, important resources have started to slowly flow back into the market, allowing retailers to build their inventories back up. The Cox report also reflects this transition. At the end of last year, 70% of dealers listed limited inventories as one of the main obstacles to their business performance. As 2022 comes to close, this number has shrunk to 51%.
While the Cox report suggests there may not be much to look forward to, it still remains to be seen how the market reacts to the new year. Given the unpredictability of the market since COVID, 2023 is just as likely to surprise as any other.
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