Optimism is growing among U.S. automobile dealers for a market that's been hard-hit by the COVID-19 pandemic.
According to Cox Automotive, the next three months are largely viewed as a potentially positive time for the industry, with the 90-day outlook index jumping by 11 points to 59 overall. Those figures represent the highest level since the pandemic began more than a year ago.
Franchised dealers, defined as those that sell both new and used vehicles, are particularly excited about the possibilities over the next 90 days, registering an index score of 68 and the third-highest rating since the Cox Automotive Dealer Sentiment Index (CADSI) was introduced in 2017.
As for right now, the current market index remains below 50, forecasting that a majority of U.S. auto dealers still 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, according to Cox's website. “Compared to a year ago, the economy is weaker, used-vehicle sales are not as strong, and used and new inventory levels are declining.”
Factors seen as adversely impacting the market include business impacts from COVID-19, which was cited by 46% of franchised and independent dealers, topping all others contributing factors, such as limited inventory and the economy.
Economic impacts as a result of the virus has been blamed for holding businesses back over the last two quarters, leaving observers to figure out the riddle of how dealer optimism can be building at the same time the pandemic continues to drag down current sentiment across the industry.
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