Jonathan Smoke, Chief Economist at Cox Automotive breaks down the latest Dealer Sentiment Index


Recently, Cox Automotive published its quarterly Cox Automotive Dealer Sentiment Index for Q2. The index measures dealer sales expectations and how they perceive current auto retail trends over the next 90 days. Joining us to discuss the findings of this latest index, is Jonathan Smoke, Chief Economist for Cox Automotive.

Smoke begins the conversation by describing first, what the Cox Automotive Dealer Sentiment Index is. He says it is where Cox surveys a large sample of car dealers every quarter to capture their views of the market. They design the survey in a way to quantifiably score car dealer sentiment. If the number is above 50, it usually means it’s good and below 50 is bad.

The latest report had a lot of records worth noting, says Smoke. In fact, he says, the bad, was very much a contributor to the good. He explains by stating that car dealers are telling us that the current market is the best market ever. The current market was rated at 67 and has been the highest score since the start of these surveys in 2017. Car dealers feel best when traffic is good, profits are strong, and when new and used vehicles are strong.

Smoke says the key drivers of dealer sentiment are the tight supply conditions that have enabled very strong pricing power. A key difference in this quarter is COVID essentially faded in the background. Now car dealers are faced with one problem: inventory.

For franchises, Smoke says, they saw improved strength within fixed operations. The bottom line, he says, is that the data indicates that car dealers always have the right view. There has not been one time since doing the surveys, that Smoke says, he has seen anything different than what car dealers saw.

Smoke wraps up the conversation by stating what car dealers and independent dealers can focus on for the next quarter to set themselves up for success. He recommends continuing to focus on inventory especially in the back half of the year.

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