U.S. automobile dealer sentiment dropped in Q4 returning to its pre-pandemic levels, according to the latest Cox Automotive Dealer Sentiment Index (CADSI.)
The overall current market index dropped below 50 into negative territory with a score of 49, a statistically significant 7-point decrease from last quarter's 56. Year over year, the current market index was up by 2 points.
The Q4 CADSI research was undertaken from Nov. 4 to Nov. 15, immediately after Election Day and at a time when COVID-19 cases were surging in the U.S. Conversely, Q3 research was conducted in late July and early August, when vehicle sales were improving and dealerships were open for business, with some restrictions.
"Dealer sentiment declined in the fourth quarter as COVID-19 cases increased and market conditions became less than perfect compared to the third quarter," said Cox Automotive Chief Economist Jonathan Smoke.
It is not all bad news, though. As Smoke notes, "Relative to a year ago, sentiment remains marginally better, and dealers describe both new and used sales as strong."
The key drivers of sentiment saw marginal shifts in Q4. The three-month market outlook index saw a 2-point decrease from the prior quarter to 48, indicating more than half of dealers are expecting the market in the next three months to be weak as opposed to strong.
Independent dealers were more pessimistic about the future, falling below the 50 threshold to 44 in Q4, which means most independent dealers expect the market to be weak.
Franchised dealers remain optimistic about the next three months with an index rating of 58, a drop from Q3 but above Q4 2019.
Derived from a quarterly survey Cox Automotive issues to a representative sample of franchised and independent auto dealers from around the country, the CADSI measures dealer perceptions of...