U.S. automobile dealer sentiment in the first quarter of 2023 was little changed from the level recorded in Q4 2022 and remains at the lowest level since the height of the global COVID-19 pandemic, according to the Cox Automotive Dealer Sentiment Index (CADSI). At 43, the current market index is below the threshold of 50, indicating more dealers view the current auto market as weak. The index remained stable quarter over quarter and down 14 points year over year.
On a positive note, the 3-month, forward-looking market outlook index rose sharply in the first quarter to 52, up from 41 in Q4 2022. In spite of factors holding back their business, a majority of dealers view the Q2 auto market as strong. The increase in Q1 breaks a trend of three consecutive quarters with a declining market outlook. However, even with the improvement in Q1, the market outlook remains below last year’s Q1 score of 64, when dealers were entering 2022 with a stronger sense of optimism.
“Despite high interest rates and stubborn inflation, the U.S. consumer continues to prop up the economy,” said Cox Automotive Chief Economist Jonathan Smoke. “Auto sales are slow by historical standards, but the sales pace has been improving in early 2023, giving dealers reason to feel somewhat optimistic about the year ahead.”
Profits Remain Under Pressure, Costs Rise to Near Record High
The overall profit index declined to 42, down from 44 last quarter and down significantly from 54 a year earlier. The profit index reached record highs in late 2021 and in the early part of 2022 – particularly for franchised dealers – but has declined for six straight quarters. While the profit index is now well below the threshold of 50, it continues to be propped up by franchised dealers who believe profits remain particularly strong at 63. Independent dealers,…
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