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Dealers say the Auto

The newly launched Cox Automotive Dealer Sentiment Index, released today, is the equivalent of a consumer confidence index, showing how U.S. dealers feel about the current automotive market and prospects for the next 90 days. It also identifies which factors are most significant in driving dealers’ optimism or pessimism, as well as variations by region. Automotive News is the first publication to carry the survey’s results.

The index measures dealer perceptions of current retail auto sales and sales expectations for the next three months as “strong,” “average” or “weak.” The responses are used to calculate what’s known as a diffusion index, where any number over 50 indicates that dealers view conditions as strong, rather than weak.

The third-quarter index rose one point from the second quarter to 55 in the latest online survey, which was conducted from July 31 to Aug. 7.​

Cox surveyed 1,033 dealers. Cox calculated overall results, as well as separate ones for new-vehicle franchise dealers and independent dealers. This report focuses on the results from the 564 franchise dealers surveyed.

 

Jonathan Smoke, Cox Automotive’s chief economist and the chief architect of the survey, said the results were in line with industry trends Cox has seen.

“To see that franchises were positive and continue to be positive about the future is really reflective of a year that, from a volume perspective, is benefiting them,” Smoke said. “To see them more positive about used sales makes complete sense. While retail demand is down about 2 percent year over year, I think they’re more than making up for that on the used market side.”

Franchise dealers’ views on the used-car sales environment were positive, with an index of 68, down slightly from 70 the previous quarter. Interestingly, independent dealers were less bullish on their used-car sales.

Franchise dealers’ sentiment around new-car sales scored lower than used vehicles, remaining unchanged at 57.

The index score for dealer profits in the past three months ticked upward by two points in the third quarter to 50.

In contrast, franchise dealers indicated barely any concern about dealership systems or tools, interest rates or credit availability to their businesses.

While dealers had a positive view of the market overall, they weren’t enthused about customer traffic to their stores. The score on that factor, 42, indicates that more dealers viewed customer traffic as weak than strong. But this could be a side effect of consumers doing more research online and visiting fewer dealerships, Smoke said.