Auto retailers in the United States view the market as weak, according to a Q3 2024 Cox Automotive Dealer Sentiment Index (CADSI) that showed the index dropped to a score of 40 from 42 in Q2 and 45 from a year ago.
That decline signals a weakened market sentiment, said Cox Automotive in a recent update. The company’s Chief Economist Jonathan Smoke said that after reaching peak profits in 2021, U.S. dealers now view the overall market as weak.
“The retail auto business today is working through a lot of uncertainty, with the coming national election front and centre, and also expectations of shifting market dynamics,” said Smoke in a statement. “U.S. dealers are feeling the effects of these dynamics in the market today and their expectations for the future.”
Between the two groups, franchised dealers have shown a slightly optimistic outlook, while independent dealers are struggling. Franchised dealers’ sentiment jumped one point from Q2 to a score of 50 in Q3.
However, Cox Automotive said independent dealers expressed a very negative outlook. The score for this group was 37 — the second lowest in the survey’s history. And in the Q3 report, they showed a particularly pessimistic view on almost every aspect of the market, pushing the overall sentiment scores down even more.
The market outlook for the upcoming three months has cooled amid political uncertainty and economic challenges. It slipped further in Q3, falling to 42 from 44. A year ago it was 45. Furthermore, the cost index hit a record high of 77 in Q3, which means that most dealers see the cost of running their business as climbing.
“Dealer profitability is one of the central measures in our quarterly survey, as it showcases the core strength of the business,” said Smoke. He later added that “most dealers feel their profitability picture is weak, and that is likely impacting many sentiment measures, dragging the overall survey scores lower.”
