WHERE’S THE BRIEF

Your 30-second guide to the latest news, updates

092718 IL WHERE'S THE BRIEF Your 30-second guide to the latest news, updates

Just Win! Broad-spectrum lending

Why you should finance more deals with SC

How to avoid straw buyer fraud

How to change odds vs. application fraud

Identity fraud can take ‘enormous toll’

What you need to know about fraud risk

Vehicle sales mostly keep on truckin’

12 ways to boost your used car results

Are Hispanics future of U.S. auto industry?

Dealerships’ optimism slides – Cox survey

 

High-powered, hurry-up offense features broad-spectrum lending play

The fourth quarter has arrived, and you’re still in the game.

But great teams finish strong.

With the holidays still ahead, your team has a big fourth-quarter opportunity to win in 2018 with an offensive strategy that will keep you on target.

Santander Consumer USA (SC), as an important part of your team, will bring every option to the game, including a hurry-up offense featuring broad-spectrum lending and aimed at achieving your sales goals before the final whistle blows.

100418 IL High-powered, hurry-up offense features broad-spectrum lending play_750x236

Although best-known as a subprime lender, SC has incorporated near prime into its offensive playbook. That should help put points on the scoreboard with more financing options for your customers.

“Santander has definitely widened its customer base in the past few months,” said Carlos Pedre of AutoNation Chevrolet Doral in Florida. “Definitely a much larger credit spectrum lender now. Long gone are the days when we looked at Santander only for the subprime customers.”

You call the plays, but it’s up to us to be key players in making it happen.

Here are the X’s and O’s for the hurry-up:

  • More financing options increasing your chances of scoring.
  • A pricing strategy calibrated to a dealer-favorable call.
  • Lower price and discount fee and a fresh approach to credit underwriting.
  • Flexibility on financing terms and increased dealer participation.
  • Most application responses received within seconds of submission reducing wait times.

“We are pleased to see great interest rates and exceptional customer service offered by SC to our customers with an A-plus credit rating, fast approval and funding process,” added Birol Karan, dealer principal at South Miami Mitsubishi. “We are lucky to have a business partner that accommodates not only the sub-prime but also the prime lending as well.”

Of course, luck is what happens when preparation meets opportunity.

“Santander is in it for the long haul,” said Elizabeth Guichardo, SC Dealer Relationship Manager in Miami, FL. “We are here as a full-spectrum lender to help our dealer partners finance all of their customers’ needs. By giving us an opportunity on every click, my dealers are seeing that numbers don’t lie and are sending us prime deals as well.”

“Our job is to help our dealers get their deals funded,” said one SC regional sales manager recently. “Putting more cars on the road is what we’re there for.”

“We simply offer an option to our dealers that they may be missing out on if they didn’t submit their apps to us,” said another SC player. “We’re providing another opportunity to make more deals happen.”

Even if you don’t choose SC for a particular play, at least you have that choice.

Leaving us on the sideline is not a good call.

Why your dealership should finance more vehicles with SC

Don’t take our word for it.

You would expect us to tell you why your dealership should finance more vehicles with Santander Consumer USA (SC) as we have in our series The Road Ahead.

Because we’re a lender that is:

  • Committed to helping your dealership succeed.
  • Confident that our updated program will enable you to make more money.
  • Compelled to do what is best for our dealer relationships.

But the reasons your dealership should finance more deals through SC really stand out – i.e., become more than the typical sales chatter – when other dealerships say it.

Being commended by dealerships that work with us is the best measure of our success.

Road Ahead V1

Jim Lopez, general manager of Del Toyota in Thorndale, PA, which sells about 3,100 vehicles a year, gave four reasons the dealership has been working with SC for more than 10 years:

  • Fast response time on applications. Knowing we have a quick approval helps us make deals with our customers faster, and we don’t have to keep them waiting.
  • The Dealer Extranet – We are big fans of the rehash tool. It gives us flexibility to rehash multiple vehicles in minutes without having to pick up the phone.
  • Funding experience. We have had great experiences with the funding department. It is fast and painless, which keeps us wanting to work with Santander.
  • Our relationship with our Santander rep adds the perfect personal touch. In a time where instantaneous accessibility is vital, she is always a phone call away.

Howard Forman, finance director at Sands Chevrolet in Surprise, AZ, with about 4,000 in annual sales, also cites the Dealer Extranet, calling it “a phenomenal tool that not only allows you the ability to rehash deals but also speeds up the funding process by utilizing the [document] upload feature.”

“Our [Dealer Relationship Manager] is a great asset, as well, because he has the ability to help us solve some of the more complicated issues that arise – helps to problem-solve … for a quick resolution.”

Here are a few other comments:

  • “SC has been a valued partner, helping Teddy Nissan grow into one of the most successful Nissan dealerships in the country” – Julio Batista, general manager, at the Bronx, NY, store.
  • “We like the ability to do loans for the full credit spectrum” – Kyle Bacon, general sales manager of Sport Chevrolet in Silver Spring, MD, which sells about 2,200 vehicles a year.
  • “Because of the flexible program [at Santander], we are able to sell more new and used cars” – Tony Avedisian, used car director, Car Pros Kia, Carson, CA., which sells some 9,000 units a year.
  • “We are a store that does 740 cars a month. Our experience with Santander is a positive one with Santander being one of our most-used lenders” – Chafik Amrani, general sales manager, AutoNation Toyota of Winter Park, FL.
  • “Santander gives us the opportunity for almost any customer that walks through the door. They are a full-spectrum lender, and every year it seems their footprint grows within the dealership” – Tony Pesce, finance manager, Greenwood Hubbard Chevrolet, Hubbard, OH.

And then there’s Darryl Morgan, general sales manager at The Sharpest Rides, a dealership in Englewood, CO, which sells 6,000 units annually as one of the largest independents in the country.

“I love Santander for a couple simple reasons,” said Morgan. “One, they are one of my only lenders that understands what we need from them – approvals. They make this happen more than others on the largest set of customers … Secondly, they’re a value bank, meaning they bring value to the relationship. My [Dealer Relationship Manager] is a partner at our dealership.”

And that you can believe.

What straw buyer fraud could mean to your dealership and how to avoid it

Beware the straw buyer.

That is, a purchaser who looks like the real thing – but isn’t.

The buyer could be someone purchasing the vehicle for a consumer with disqualifying credit issues, or he/she could be “a criminal who is perpetrating a fraud scheme.”

Such as the Wisconsin man who authorities have charged with a dozen counts of money laundering that involved selling luxury cars overseas by defrauding local car dealers. Using dozens of straw buyers, the man allegedly secured $30 million in financing to buy the vehicles.

091818 IL What you need to know about fraud risk – and why you should care_V4“To a lender, a straw buyer might look like a real buyer,” wrote Frank McKenna, chief strategist at PointPredictive, a consulting firm specializing in fraud prevention. “[But] their whole purpose is to get a lender to give money to an organized group of crooks.”

As in the Wisconsin case, selling to a straw buyer or buyers can hit a dealer’s bottom line hard.

RELATED

What you need to know about fraud risk – and why you should care (Part 1)

Identity fraud can take ‘enormous toll’ on your dealership profits (Part 2)

How to change the odds in your favor against application fraud (Part 3)

“Lending to straw buyers/borrowers often leads to extremely high levels of default … In fact, most loans will default without a single payment,” wrote McKenna, who calculates that “at an average loss of $24,000 per fraud occurrence, your dealership is forced to sell 10 cars to make up for a single instance.”

Here’s what Santander Consumer USA’s Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs suggests to look for and to reduce straw buyer fraud risk at your dealership:

The Red Flags

  • Applicant is declined and then returns with a co-buyer
  • Co-buyer has a different last name and/or address
  • Applicant asks to take contract to co-buyer
  • Primary and co-buyer continue to change on the same vehicle application
  • Insurance policy lists multiple vehicles with different last names

And the Checklist

  • Both applicants present at time of contract signing
  • Don’t allow the contract to leave the dealer premises
  • Ask for references on both applicants, and contact the references
  • Ask who will be making payments while both applicants are present

“Santander Consumer USA (SC) is committed to working with dealers to raise awareness of fraud and elder-abuse risks in the retail auto space,” says Driving a New Model, which was created by SC’s fraud management group. “Watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks.”

This series, Driving a New Model, is aimed at helping dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

How to change the odds in your favor against application fraud

When the numbers just don’t add up …

It could be an honest mistake or a misunderstanding.

Or it could be fraud, specifically, application misrepresentation, according to a dealer brochure developed by the Enterprise Fraud Management team at Santander Consumer USA.

A good time to figure that out is when the customer applying for financing is sitting right in front of you.

091818 IL What you need to know about fraud risk – and why you should care_V4“Only about 15 percent of auto loan fraud is identity theft,” wrote a fraud strategist from PointPredictive consulting firm. “So if your only fraud control is checking a driver’s license or Social Security card, then you are really only addressing a small fraction of the risk.”

The risk with every auto finance application also includes:

  • Income fraud in which a borrower lies about his/her income.
  • Employment fraud in which the borrower lies about employment, work history or job title.
  • Document fraud in which a borrower falsifies pay stubs to substantiate income claims.

RELATED

What you need to know about fraud risk – and why you should care

Identity fraud can take ‘enormous toll’ on your dealership profits

And the more finance applications your dealership submits, the greater your chances of falling victim – unless you take (or have taken) steps to change the odds in your favor, of course.

SC’s Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs suggests what to look for and how to reduce application misrepresentation risk at your dealership:

The Red Flags

  • Income inconsistent with local salary rate.
  • Business revenue inconsistent with personal or self-employed income.
  • Income that seems inappropriate for the applicant’s age or the employer.
  • Non-existent employer, unfamiliar employer name or no longer employed.
  • Address is a P.O. box, drop box or mail forwarding address.

“It’s quite common for employment information to be fabricated during the auto-lending process,” cautioned the PointPredictive consultant.

And the Checklist

  • Pay attention to buyer behavior, such as nervousness or indirectness in answering questions.
  • Pay attention to application details by comparing application information to the credit bureau report – do the trade lines seem appropriate with the applicant’s stated income and position?
  • Ask for income verification via pay stubs – make sure they’re genuine – or other documentation. Call employer phone number and contact references.

“Santander Consumer USA (SC) is committed to working with dealers to raise awareness of fraud … in the retail auto space,” says the company. “[And] watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks.”

This series, Driving a New Model, is aimed at helping dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

Identity fraud can take ‘enormous toll’ on your dealership profits

There’s not much question that identity fraud is an important issue for businesses, including automotive dealerships.

Last year alone, nearly 10,000 reports of identity fraud related to auto financing and leasing were compiled by the Federal Trade Commission, or one for every 3.7 dealerships in the United States, and a 43 percent increase over the previous year.

But with odds of only one in four, why should you worry about identity fraud?

091818 IL What you need to know about fraud risk – and why you should care_V4“You should be concerned with fraud because of the hit your profits can take,” wrote Frank McKenna of PointPredictive consulting firm in a recent Digital Dealer Magazine report. “Car dealerships that have had a problem with fraud in the past report that it can take an enormous toll on their profits.”

McKenna wrote that it can take the profit of 10 good loans to recover the cost of one fraudulent loan. Although that figure could be even higher based on average cost data – around $25,000 per vehicle – from the U.S. Bureau of Economic Analysis and average gross profit data – ranging from $2,000 to $2,500 – from the National Automobile Dealers Association (NADA).

RELATED

What you need to know about fraud risk – and why you should care

And the more finance applications your dealership submits, the greater your chances of falling victim – unless you take (or have taken) steps to change the odds in your favor, of course.

Santander Consumer USA’s Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs suggests what to look for and how to reduce identity fraud risk at your dealership:

The Red Flags

  • Consumer or service member alerts on credit report.
  • Social Security number (SSN) issued within the last five years.
  • Recently opened trade lines, thin file or credit history, and a high number of inquiries in the recent past with no new accounts opened.
  • Applicant is listed as an Authorized User – Not the Primary Account holder on multiple accounts. Fewer than 3 primary accounts.
  • Discrepancies and/or inconsistencies between a credit application and credit bureau report.

And the Checklist

  • Examine and thoroughly review government identification for any suspicious conditions – tilted font lines or evidence of physical damage on a driver’s license or state ID, for example – and match the SSN to first and last name on the driver’s license or state ID.
  • Match government identification to details on the credit bureau report.
  • Ask dynamic, knowledge-based questions about specific trade lines from the credit bureau, such as “Who financed your last vehicle?” and “What is the payment amount?” This may help us confirm we are speaking to the actual applicant.
  • Compare the customer personal attributes to the credit bureau report – does the age seem appropriate to the person with whom you are speaking, for example.

“Santander Consumer USA (SC) is committed to working with dealers to raise awareness of fraud and elder-abuse risks in the retail auto space,” says the brochure, Driving a New Model, which was created by SC’s fraud management group. “[And] watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks.”

This series, Driving a New Model, is aimed at helping dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

What you need to know about fraud risk – and why you should care

It goes without saying (almost) that an auto lender such as Santander Consumer USA (SC) would be concerned about the threat from fraud.

Most auto dealers also would agree that it poses a risk to their businesses.

But few would suggest that fraud is as easy to identify and deal with as it is to acknowledge.

So why should you care if your dealership hasn’t had a problem? You’ve heard the old saying that “past performance is no guarantee of future results.” Well …

091818 IL What you need to know about fraud risk – and why you should care_V4

“The number of identity theft, fraud and elder-abuse complaints … has increased significantly, resulting in a push at all levels of government to regulate more closely auto lenders and dealers,” says an SC-produced brochure, Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs.

“Here in the U.S., fraud is on the rise in a big way,” wrote Frank McKenna of PointPredictive consulting firm in a separate Digital Dealer Magazine report 5 Reasons Car Dealers Should Be Concerned with Fraud. “Massive data breaches, like the Equifax breach, have given criminal fraudsters access to more information to defraud consumers and businesses. That is why we can expect more fraud perpetrated and more losses incurred than any other point in history.”

McKenna reported that “fraudulent applications could exceed $6 billion” this year, with one in every 200 applications containing information that could lead to a problem with the loan after funding.

Driving a New Model was produced to help dealers identify and take action against this threat.

“Awareness of fraud and elder-abuse red flags will allow you to take steps to reduce these risks and will result in a number of benefits,” according to the SC pamphlet.

Driving a New Model suggests those benefits could comprise:

  • Improvement in the overall customer experience
  • Reduction in consumer harm and risk to the dealer’s reputation
  • Reduction in credit stipulations on an application
  • Reduction in funding delays to dealership
  • Reduction in post-funding disputes and potential unwinds

Our upcoming series, Driving a New Model, will help dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

“Establishing a partnership with lenders is the best way to fight fraud,” wrote McKenna. “Since lenders have more tools to diagnose and detect fraud, they can help you understand the impact to you before it ever happens. Good collaboration on fraud is the key to winning the war on fraud.”

U.S. vehicle sales mostly keep on truckin’ in 2018 despite lower expectations

The much-anticipated 2018 vehicle sales slump hasn’t happened yet. Now the question may be whether it will happen at all this year.

Despite predictions by many auto industry analysts that this would be a down year compared to 2017, U.S. vehicle sales keep on truckin’ in 2018 – thanks mostly to pickup and SUV sales.

Sales in five out of eight months through August exceeded same-month results in 2017.

Photo credit: Ford Motor Co. via NewsPress USA Ford F-Series and other pickups and SUVs are towing U.S. sales higher than expected.

Photo credit: Ford Motor Co. via NewsPress USA
Ford F-Series and other pickups and SUVs are towing U.S. sales higher than expected.

 

If sales continue at just over last year’s level for the last four months of the year, they actually would eke out a margin of around 170,000 vehicles over 2017 sales. That would be a 1 percent gain and put the year nearly on par with record-setting 2016 and 2015.

That also would not be a result anyone saw coming at the beginning of the year, with most analysts predicting a dip under 17 million and as low as 16.7 million.

For example, Cox Automotive recently raised its forecast to 17.1 million from 16.7 million in sales, matching forecasts of General Motors and LMC Automotive.

Here’s how the numbers could look for the rest of this year, based on data from the U.S. Department of Commerce’s Bureau of Economic Analysis:

  • If sales for the remainder of 2018 match the last four months of last year, vehicle sales could exceed 17.7 million, although those results included a record September.
  • Results will come close to 2015 and 2016 if sales this year match the end of those years.
  • If the last four months of 2018 match sales during the same period of 2014, this year still would top 17 million for the fourth time since then.
  • It would take the worst results since 2013 to come in as low as 16.8 million.

Although car sales have declined to less than 30 percent of total sales for the first time in history, trucks and SUVs are more than making up the difference so far in 2018.

The top-five selling models so far this year, for example, all are trucks or SUVs – Ford F-Series, Ram Pickup, Toyota RAV4, Nissan Rogue and Honda CR-V, with four of five selling more than last year. Pickups and SUVs also dominate the top 20 vehicles with 13, most of which also have more sales. The only passenger cars among the top-10-selling vehicles – Toyota Camry, Honda Civic, Toyota Corolla family and Honda Accord – have lower sales compared to last year.

There is potential turbulence ahead, such as tariffs, trade talks, gas-price uncertainty, vehicle-price increases, higher interest rates and lower consumer confidence.

“Despite generally good conditions, automakers are in for a rough finish to 2018,” Forbes magazine suggested based on an interview with a senior economist from Cox Automotive.

But that prediction has a tone similar to expert forecasts at the beginning of the year.

And we see how those have worked out.

12 of the best ways to boost your dealership’s used-car results

How does your used-car operation measure up?

A dozen key performance indicators (KPI) here should begin to give you an idea of where your dealership stands compared to thousands of others, including high performers.

Cox Automotive addressed KPIs in “Metrics That Matter for Best Dealership Performance” in its 2018 Used Car Market Report & Outlook, compiling a list of 12 KPI and best-in-class benchmarks from “vast amounts of data” it collected for the annual report.

110717 IL Personal touch important, even though car shoppers want digital options

“Used retail unit volume equaling or surpassing new retail volume is a foundational correlation of highly successful used-vehicle departments, assuming the dealership is meeting new-vehicle volume goals.”

A great result is 1.25 used vehicle sales to every one new-vehicle sale.

Inventory turn rate

“The highest performers turn inventory every 20 days … Fast inventory turns maximize high-gross opportunities associated with fresh inventory and drive profits in other dealership departments.”

Price to market/market days’ supply

“Top performers embrace the balance between a vehicle’s desirability and its price. They use data to dictate when it is appropriate to ‘go for the gross’ and when the window for profit is short … The data is also a foundational element in inventory acquisition and appraisal processes.”

Mechanical and cosmetic reconditioning time

“Top performers solve reconditioning delays … Speed is paramount.”

Reduced reconditioning markup for older vehicles

“Retail reconditioning hinders vehicle acquisition, especially on older vehicles that tend to be some of the most desirable but also have the highest reconditioning costs.”

Packs

“High performers understand the drag that packs place on their used car operations. They slow down acquisition, including reducing new car appraisals.” The Internet has changed this dynamic.

Immediate wholesale volume

The best used-car departments “separate the measurements of immediate wholesale, that is, a vehicle never offered for retail from aged wholesale. They look for ways to keep trades … [and] typically have discounted recon rates for older vehicles and few to no packs.” This should be “under 33 percent.”

Immediate wholesale profit/loss per vehicle

“The goal is a small profit/loss per vehicle [about $150], an indication that appraisers are accurately assessing valuations and assumes no inventory adjustments or pack adjustments.”

Aged wholesale loss per vehicle

“Vehicles that were reconditioned and offered for retail but did not sell are likely to lose money.” Top performers separate these “from the ones that were wholesaled immediately and set a KPI for the average wholesale loss on these units. A benchmark of 5 percent wholesale loss allowance is common.”

Appraisal-to-trade ratio

“[This] is the ratio of all vehicles appraised to how many were traded … It is a key indicator of the support the used-car department provides to the new-car department.” It should exceed 50 percent.

Gross return on investment

“GROI is the product of the gross as percentage of the sale multiplied by turn rate. … For a vehicle to make financial sense, the goal is a minimum GROI of 120.” This can be applied to an entire inventory.

Cost to market

“The highest achievers monitor cost to market, which compares the retail value of a vehicle to the total investment in a vehicle, including acquisition cost, reconditioning, transportation, pack, etc. … Minimize costs to enable aggressive acquisition of inventory and deliver maximum ROI.”

For more details, download the 2018 report.

Habla Español: Are Hispanics the future of the U.S. auto industry?

081418 IL Habla Español Are Hispanics the future of the U.S. auto industry

 

Yes and no.

While the majority of vehicle purchasers will continue to be non-Hispanic consumers, Hispanics are expected to drive growth for the next 30 years or so.

“The future of the auto industry is largely in Hispanic hands,” Parker Morse, The Marketing Insider columnist, wrote in Why Hispanics Are the Future of the Auto Industry.

While that may sound like an overstatement – Hispanics are buying only about two million vehicles a year out of total sales of 17 million – there is no denying they are the fastest-growing U.S. demographic. Hispanics will drive about 50 percent of the country’s population growth over the next five years, according to Dealer Marketing Magazine in How Dealers Can Reach the Underserved Hispanic Market.

“It’s estimated that new car sales to Hispanics will grow by 8 percent over the next five years, compared to a 2 percent decline amongst the total market,” according to Dealer Marketing.

Industry growth engine?

“In fact, Hispanic consumers could well be the auto industry’s leading growth engine for the next 20 to 30 years, many industry executives and marketing experts believe,” Automotive News reported. “And it’s happening not just in those states where Hispanic demographics have always been strong, such as California, Texas and Florida, but increasingly in the Midwest and everywhere else.”

Capturing a fraction of this market “can mean huge gains for local dealerships.” said Dealer Marketing.

“But knowing that Hispanics are more likely to buy cars than other audiences and actually selling cars to Hispanics are two different things,” suggests The Marketing Insider.

Reflecting Hispanic culture

“Research shows that a vast majority – 79 percent – of Hispanics are more receptive to auto ads when those ads are reflective of their culture in some way. This includes ads or initiatives that involve Spanish-language content, as well as those that speak to the deeper values of the Hispanic community.”

The Insider cited a Ford social media video ad campaign that featured “everyday heroes in Hispanic communities” drawing nearly two million views and 6.6 million social impressions in nine weeks, as well as a Honda campaign “aligning with certain values and behaviors of Hispanic consumers.”

What this means, according to Dealer Marketing, is “creating authentic, culturally relevant online experiences for Hispanics … [while also] deploying a Spanish version of a dealership’s website and ensuring it remains in sync with the content and inventory found on the dealer’s English website.”

Speak the language

“Years ago, this represented a technically complex, costly endeavor,” reported Dealer Marketing. “These days, affordable solutions exist that can deploy secure translated sites in weeks.”

The dealer magazine also recommends:

  • Customizing text, graphics or promotional elements on translated websites.
  • Making content available on mobile phones – “mission critical” – because Hispanics use their smartphones “far more than the non-Hispanic average.”
  • Don’t leave out social media, where up to 50 percent of Hispanic respondents discuss brands.
  • Make sure your team can accommodate Spanish-speaking consumers when they visit.

“There’s no better way to build trust with this audience than to show that you truly understand not only the language that they speak, but also the values they uphold,” wrote columnist Morse.

Where have we heard that before?

Optimism among dealerships slides – Cox Automotive survey

Auto dealers are far less optimistic now than they were about last quarter.

Probably with good reasons.

“While dealers were more positive than negative in describing the current market, expectations for the future deteriorated substantially,” said Cox Automotive in a report on its latest Dealer Sentiment Index, which is gathered through a quarterly online survey of franchise and independent dealerships.

 

dealer-matters

 

“Higher costs, inventory concerns and rising [consumer] interest rates are likely driving dealers to believe the best times in this cycle may soon be in the rearview mirror.”

Another contributor to the change was declining expectations of tax cuts, Cox said.

“Dealers shifted from a majority expecting a positive impact to their business from tax reform to a majority now indicating they have experienced no impact,” according to Cox.

The lower optimism among dealers appeared justified as new-vehicle sales for most automakers declined in July – although Fiat Chrysler, Subaru and Volkswagen bucked the trend – largely because of the continuing decline of passenger car sales in favor of SUVs and trucks.

Cox Automotive found that one of the most significant drops in optimism involved the new-car sales environment, which slipped about 10 percent to 59/100 from 65/100, although optimism for used-vehicle sales rose three points to 72/100 among franchise dealers. Independent dealers were split about 50/50 on whether the current used-vehicle sales environment is “good” or “poor.”

The expectation of a positive impact from tax cuts on profitability plunged to 61/100 from 77/100.

Despite the lower level of optimism, most industry analysts expect 2018 new-car sales around 17 million because of stronger-than-expected results in the first half of the year.

The Dealer Sentiment Index results are based on a survey of 1,053 franchise and independent dealer respondents April 30 to May 14, with responses weighted by dealership type (franchise or independent) and volume of sales to reflect the national dealer population.