Monday, 13 September 2021 17:42

Despite Continued Inventory Troubles, U.S. Auto Dealer Sentiment Remains Positive


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As tight vehicle inventory continues to vex the auto industry, U.S. dealer sentiment in the third quarter softened but remains mostly positive and above levels recorded in Q3 2020 and Q3 2019. 

The current market index reading of 62 in the most recent Cox Automotive Dealer Sentiment Index (CADSI) indicates more dealers feel the automotive market is strong compared to the number who feel the market is weak.


The key drivers of sentiment saw varying shifts in Q3. The three-month market outlook index saw a three-point decrease from the prior quarter, meaning the outlook is waning, although, at 60, more dealers still see the future market as strong than see it as weak.


The profits index saw a slight improvement compared to the prior quarter, hitting a record of 60. At the same time, the price pressure index increased modestly from Q2's record low---slightly more dealers are now feeling pressure to lower prices, although that group is still in the minority.


"Dealer sentiment has moderated from a record high in the spring," said Cox Automotive Chief Economist Jonathan Smoke. "Dealers are still optimistic about the coming months, but the new-vehicle inventory situation is not improving, and sales are suffering."


Consistent with current market trends, the new-vehicle inventory index was unchanged from last quarter's record low of 13 and down by a notable 16 points compared to Q3 2020. Not only is inventory tight, but the mix is poor as well and getting worse. The new-vehicle inventory mix index fell to a historically low reading of 18 in Q3.


While new-vehicle inventory remains challenged, there are signs used-vehicle inventories are improving. The used-vehicle inventory index saw substantial growth from Q2 to Q3, increasing by 10 points to 31. The used-inventory mix index also improved, although only...

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