smoke jonathan

US auto dealers are optimistic about the first quarter of 2018 and believe inventory issues of earlier this year have mostly subsided, according to the fourth-quarter Cox Automotive Dealer Sentiment Index (CADSI). 

Despite a healthy sales environment during the survey period, both franchise and independent dealers continue to feel pressure from lower prices, high business running costs and weak customer traffic.

Cox Automotive chief economist Jonathan Smoke said: “Although price pressures and costs are working against them, we continue to be encouraged by the fact that dealers are optimistic about market prospects.

“US auto dealers are expecting a strong market in the first quarter of 2018."

The quarterly Cox Automotive survey indicates that current dealer sentiment remained similar to the view of the market three months ago.

Smoke said: “On the surface, it would appear that not much has changed for dealers over the last 90 days.

“But when you consider that last quarter's survey occurred in early August before the market saw back-to-back months of the best new-vehicle sales of the year, it makes sense that the biggest changes in dealer attitudes came from franchise dealers and their views of new vehicle sales and new vehicle inventory."

US auto dealers overall – both franchises and independents – were more positive about the next three months.

Total price pressure on dealers grew, driven by independents rather than franchise dealers.

Smoke added: “Independents are having to deal with the scarcity of five to eight-year-old vehicles by shifting to what's most available: less than four-year-old vehicles.

“By shifting to newer vehicles, they are paying higher prices, yet they are also continuing to serve a value-seeking consumer who is more likely to have credit challenges. That translates into relentless pressure on price.”