The Cox Automotive Dealer Sentiment Index (CADSI) shows that current market sentiment improved slightly in the first quarter compared to the fourth quarter of 2023, increasing from 40 to 42, but remains well below the 50 threshold, indicating most dealers see the current market as weak.
The survey’s current market index is largely driven by profitability, customer traffic and costs. Of the three, profitability continues to weigh most heavily on both franchised and independent dealers, according to the latest report. At 33, the profitability index fell to its second-lowest score ever, behind only Q2 2020, at the height of the COVID-19 pandemic. After peaking at 60 in 2021, the profitability index has continued to decrease, hitting a post-pandemic low for the second straight quarter in Q1, indicating most dealers see profits as weak, not strong.
For franchised dealers, the profitability index has declined significantly from the first half of 2022, when the index was near a record high and above 80. Beginning in the second half of 2022, the index has dropped significantly and, in Q1 2024, hit 41 – the lowest point in the survey’s history excluding Q2 2020.
“The vehicle market in the U.S. is shifting from a seller’s market to a buyer’s market, and dealers are feeling the pinch of tighter margins and higher costs,” said Cox Automotive Chief Economist Jonathan Smoke. “After some highly profitable years for many dealers, 2024 will be a tough comparison. Dealer costs continue to grow and profitability per sale has dropped. As we often see in our surveys, spring is bringing some optimism, but dealers are clearly indicating the U.S. auto market is very different than it was just two years ago.”
While the current market index, and many of the factors driving it, remains weak, the market outlook index improved significantly in Q1, jumping from 41 last quarter to 51 in Q1. The market outlook index, which queries dealers about expectations for the vehicle market…
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