dealer sentiment index · 2020. 5. 15. · more than a third of dealers in total and over half of...
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Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
BackgroundData for the Cox Automotive Dealer Sentiment
Index (CADSI) is gathered via a quarterly online
survey of franchise and independent auto dealers.
Dealer responses are weighted by dealership type
and volume of sales to closely reflect the national
dealer population. Data is used to calculate an
index wherein a number over 50 indicates more
dealers view conditions as strong or positive
rather than weak or negative.
The Q3 CADSI is based on 1,276 dealer
respondents. The survey was conducted
from July 31 to August 13, 2018.
The CADSI was first published in Q3 2017
by Cox Automotive. The next quarterly
report will be released in December 2018.
1
Key TakeawaysU.S. automobile dealers were more positive than negative in describing the current market in the third quarter according to the Q3 2018 Cox Automotive Dealer Sentiment Index (CADSI). With an index score of 51, the improvement relative to last year’s Q3 score of 45 was statistically significant.
The index for the next three months is 57, indicating dealers expecting conditions to be strong in the future outnumber those who think conditions will be weak. The difference from last year’s score of 52 shows that dealers believe the market is strong and optimism is not fading.
As seen consistently in the CADSI data, sentiment skews more positive for franchised dealers compared to independents. While the aggregate view of the current market was a strong 51, franchised dealers were positive at 59 and independents were weak at 48.
2
However, the gap in optimism about the next 90 days closed this quarter as franchises saw a decline from 69 to a not-quite-as-positive 61. Independents, on the other hand, saw a gain in optimism, rising to 55 in Q3 from 52 in Q2.
In the Q3 2018 CADSI, we also explored dealers expectations on the impact of proposed auto tariffs on business profitability in the future.
More than a third of dealers in total and over half of franchised dealers expect tariffs on imported vehicles and parts to have a negative impact on their business’ profitability.
While only 11 percent of dealers indicated there would be a positive impact if import tariffs are imposed, the silver lining seems to be what consumers will purchase more of instead of imports, namely used vehicles and domestic vehicles.
Q1: How would you describe the current market for vehicles in the areas where you operate?
3
IndependentDealers 48
Q3 ‘18Q2 ‘1850
Q3 ‘1742
100Strong
50Average
0Weak
OVERALL SCORE 45Q3 ‘17
51Q2 ‘18
51Q3 ‘18
Franchise Dealers Q2 ‘18
56Q3 ‘1755 59
Q3 ‘18
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
Q2: What do you expect the market for vehicles in your area to look like 3 months from now?
4
55Q3 ‘18
Q2 ‘1852
Q3 ‘1751
100Strong
50Average
0Weak
52Q3 ‘17
56Q2 ‘18
57Q3 ‘18
Q2 ‘1869
Q3 ‘1757 61
Q3 ‘18
IndependentDealers
OVERALL SCORE
Franchise Dealers
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
Q3: How do you rate the customer traffic to your dealership over the past 3 months?
5
39Q3 ‘18
Q2 ‘1839
Q3 ‘1736
100Strong
50Average
0Weak
37Q3 ‘17
40Q2 ‘18
41Q3 ‘18
Q2 ‘1844
Q3 ‘1742 46
Q3 ‘18
IndependentDealers
OVERALL SCORE
Franchise Dealers
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
Q4: How would you describe your profits over the past 3 months?
6
40Q3 ‘18
Q2 ‘1841
Q3 ‘1738
100Strong
50Average
0Weak
41Q3 ‘17
43Q2 ‘18
42Q3 ‘18
Q2 ‘1851
Q3 ‘175049
Q3 ‘18
IndependentDealers
OVERALL SCORE
Franchise Dealers
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
Q5: How would you describe your ability to get credit to operate your business over the past 3 months?
7
57Q3 ‘18
Q2 ‘1857
Q3 ‘1752
100Easy
50Average
0Difficult
55Q3 ‘17 59
Q2 ‘1859
Q3 ‘18
Q2 ‘1865
Q3 ‘1766 67
Q3 ‘18
IndependentDealers
OVERALL SCORE
Franchise Dealers
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
Q6: How would you describe the cost of running your dealership over the past 3 months?
8
67Q3 ‘18
Q2 ‘1869
Q3 ‘1767
100Growing
50Average
0Declining
68Q3 ‘17
70Q2 ‘18
67Q3 ‘18
Q2 ‘1870
Q3 ‘176967
Q3 ‘18
IndependentDealers
OVERALL SCORE
Franchise Dealers
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
Q7: How would you describe your dealership’s current fixed capital investment levels?
9
51Q3 ‘18
Q2 ‘1852
Q3 ‘1749
100Growing
50Average
0Declining
53Q3 ‘17
54Q2 ‘18
53Q3 ‘18
Q2 ‘1863
Q3 ‘176362
Q3 ‘18
IndependentDealers
OVERALL SCORE
Franchise Dealers
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
Q8: How would you describe the current new-vehicle sales environment?
10
100Good
50Average
0Poor
57Q3 ‘17
59Q2 ‘18
60Q3 ‘18
Q2 ‘1859
Q3 ‘1757 60
Q3 ‘18
N/AIndependentDealers
OVERALL SCORE
Franchise Dealers
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
Q9: How would you describe the current new-vehicle inventory levels?
11
100Growing
50Average
0Declining
67Q3 ‘17
61Q2 ‘18
57Q3 ‘18
Q2 ‘1861
Q3 ‘176757
Q3 ‘18
N/AIndependentDealers
OVERALL SCORE
Franchise Dealers
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
12
52Q3 ‘18
Q2 ‘1850
Q3 ‘1753
100Good
50Average
0Poor
57Q3 ‘17
55Q2 ‘18
57Q3 ‘18
Q2 ‘1872
Q3 ‘1768 72
Q3 ‘18
Q10: How would you describe the current used-vehicle sales environment?
IndependentDealers
OVERALL SCORE
Franchise Dealers
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
13
Independent
Dealers 46Q3 ‘18
Q2 ‘18
45Q3 ‘17
50
100
Growing
50
Average
0
Declining
OVERALL SCORE
51Q3 ‘17
49Q2 ‘18
48Q3 ‘18
Franchise
Dealers Q2 ‘18
58Q3 ‘17
5552Q3 ‘18
Q11: How would you describe the current used-vehicle inventory levels?
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
14
IndependentDealers 63
Q3 ‘18Q2 ‘1863
Q3 ‘1762
100More
50Average
0Less
OVERALL SCORE 63Q3 ‘17
64Q2 ‘18
63Q3 ‘18
Franchise Dealers Q3 ‘17
67Q2 ‘186665
Q3 ‘18
Q12: How much pressure do you feel to lower your prices?
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
15
IndependentDealers 49
Q3 ‘18Q2 ‘1851
Q3 ‘1751
100Growing
50Average
0Declining
OVERALL SCORE 52Q2 ‘18
52Q3 ‘17
50Q3 ‘18
Franchise Dealers Q2 ‘18
55Q3 ‘175553
Q3 ‘18
Q13: How would you describe your dealership's current staffing levels?
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 8
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What are the Factors Holding Back Your Business?
Q3 ’18 Q2 ’18 Q3 ‘171 Limited Inventory 38% 36% 34%
2 Market Conditions 37% 43% 43%
3 Credit Availability for Consumers 35% 36% 34%
3 Competition 35% 28% 34%
5 Expenses 29% 25% 30%
6 Interest Rates 17% 16% 7%
7 Consumer Confidence 16% 15% 18%
8 Consumer Transparency in Pricing 15% 14% 11%
9 Staff Turnover 12% 11% 11%
10 Credit Availability for Business 9% 9% 11%
11 Regulations 7% 12% 11%
11 Dealership Systems/Tools 7% 7% 6%
13 Too Much Retail Inventory 5% 7% 9%
13 OEM Mandates/Restrictions 5% 6% 5%OVE
RA
LL R
AN
K
Dealer Sentiment Index Q3 2018
Significant decrease vs previous quarter Significant increase vs previous quarter
17
What are the Factors Holding Back Your Business?
Q3 ’18 Q2 ’18 Q3 ‘171 Market Conditions 40% 47% 43%
2 Competition 37% 36% 37%
3 Limited Inventory 28% 23% 16%
3 Staff Turnover 28% 22% 25%
5 Expenses 25% 23% 23%
6 Credit Availability for Consumers 23% 24% 18%
7 Interest Rates 22% 21% 6%
8 OEM Mandates/Restrictions 21% 24% 21%
9 Consumer Confidence 20% 19% 23%
10 Consumer Transparency in Pricing 18% 18% 17%
11 Dealership Systems/Tools 12% 9% 8%
13 Regulations 5% 10% 10%
14 Too Much Retail Inventory 3% 6% 12%
15 Credit Availability for Business 2% 3% 2%FRA
NC
HIS
E D
EALE
RS
Dealer Sentiment Index Q3 2018
Significant decrease vs previous quarter Significant increase vs previous quarter
18
What are the Factors Holding Back Your Business?
Q3 ’18 Q2 ’18 Q3 ‘17
1 Limited Inventory 41% 41% 40%
2 Credit Availability for Consumers 39% 40% 39%
3 Market Conditions 36% 42% 43%
4 Competition 34% 25% 33%
5 Expenses 30% 26% 32%
6 Interest Rates 15% 14% 7%
6 Consumer Confidence 15% 14% 17%
8 Consumer Transparency in Pricing 13% 13% 10%
9 Credit Availability for Business 12% 11% 15%
10 Staff Turnover 7% 8% 7%
10 Regulations 7% 13% 11%
12 Too Much Retail Inventory 5% 8% 8%
12 Dealership Systems/Tools 5% 6% 5%IND
EPEN
DEN
T D
EALE
RS
Dealer Sentiment Index Q3 2018
Significant decrease vs previous quarter Significant increase vs previous quarter
The Effect of Automotive Tariffs
19Dealer Sentiment Index Q3 2018
Import Tariff Impact (Full Breakout)OVERALL Q3 2018Positive Impact 11%No Impact 51%Negative Impact 38%
FRANCHISEPositive Impact 9%No Impact 35%Negative Impact 56% B
INDEPENDENTPositive Impact 11%No Impact 57% ANegative Impact 32%
Dealer Sentiment Index Q3 2018Dealer Sentiment Index Q3 2018
Q: Which of the following best describes the impact on your business’ profitability next quarter if tariffs are imposed on imported vehicles and parts?
A/B Indicates significant difference between groups at the 95% confidence level.
Positive Impact of Import TariffsOverall Franchise Independent
Increased traffic for used vehicles 44% 30% 48%
Will make the market stronger overall 28% 29% 28%
Increased margin on all used vehicles as market adjusts 27% 8% 32% A
Increased domestic vehicles sales 27% 44% B 22%
Increased margin on all new vehicles as market adjusts 12% 18% 11%
Increased margin on all vehicle repairs as market adjusts 8% 12% 7%
Other 0% 0% 0%
No positive impact 15% 17% 15%
A/B Indicates significant difference between groups at the 95% confidence level.
Dealer Sentiment Index Q3 2018Dealer Sentiment Index Q3 2018
Q: What, if any, positive impacts would imposing tariffs on imported vehicles and parts have on your business? Please select all that apply.
Negative Impact of Import TariffsOverall Franchise Independent
Higher prices on used vehicles as market adjusts 60% 44% 70% A
Higher prices on imported vehicles 55% 62% B 51%
Higher prices on new vehicles as market adjusts 48% 66% B 38%
Lower (or delayed) new vehicle sales 27% 38% B 21%
Higher prices on domestic vehicles 25% 24% 26%
Lower (or delayed) used vehicle sales 23% 16% 27% A
Other 3% 4% 3%
No concerns 4% 2% 5%
A/B Indicates significant difference between groups at the 95% confidence level
Dealer Sentiment Index Q3 2018Dealer Sentiment Index Q3 2018
Q: What, if any, concerns do you have if tariffs are imposed on imported vehicles and parts? Please select all that apply.
Contact Information:
Dara HailesManager, Public RelationsCox [email protected]
Mark SchirmerSenior Manager, Public RelationsCox [email protected]
Dealer Sentiment Index Q3 2018Dealer Sentiment Index Q3 2018