With COVID-19 case trends declining and vaccination rates increasing, U.S. automobile dealers are mostly optimistic about the automobile market in the coming 90 days, according to the latest Cox Automotive Dealer Sentiment Index (CADSI) released March 8.
The 90-day outlook index jumped 11 points to 59, the highest level since the onset of the global pandemic, indicating automobile dealers in the U.S. believe the market will be strong in the coming three months.
The 90-day outlook index typically moves up in the first quarter of the year, as dealers optimistically look forward to a strong spring selling season. Franchised dealers---those who sell both new and used vehicles---are particularly optimistic about the next 90 days, with an index score of 68, a rating above Q1 2020 (66) and the third-highest rating since the CADSI was introduced in 2017.
The current market index, however, stayed at 49, a rating below 50, indicating a majority of U.S. auto dealers feel the current market is average or weak. The quarter-over-quarter consistency is in marked contrast to the large shifts seen in 2020 as a result of COVID-19 and the presidential election.
"Current dealer sentiment was remarkably stable to start the year despite pandemic conditions reaching their worst level yet in the U.S. in January," said Cox Automotive Chief Economist Jonathan Smoke. "Compared to a year ago, the economy is weaker, used-vehicle sales are not as strong and used and new inventory levels are declining."
When looking at factors holding back business, Business Impacts from COVID-19 was cited as the overall top factor by 46% of franchised and independent, edging out Limited Inventory (43%) and Economy (42%). Business Impacts from COVID-19 has maintained the top spot in factors holding back business for the past two quarters.
So, while advances in overcoming the impact of COVID-19 appear to be bolstering dealer optimism, the pandemic continues to weigh on current dealer sentiment.
The Q1 CADSI research was in market from...