Despite 2018 forecasts, dealers are optimistic about Q2 – Cox Automotive

Car dealers are optimistic about next quarter.

Maybe that optimism should come as a surprise considering predictions that new-vehicle sales will decline again this year and that used-vehicle sales will rise only slightly.

New-car sales the first two months of the year were down about 19,000 vehicles compared to 2017, with March sales figures due out in a few days. Last year, March was the second-strongest month of the year with new-vehicle sales of about 1.55 million.

032918 IL Despite 2018 forecasts, dealers are optimistic about Q2 – Cox Automotive - Copy (1)

And yet, the mixed outlook is not enough to curb dealers’ enthusiasm for the second quarter.

“Expectations for the next quarter are up substantially [over Q1],” according to a Cox Automotive survey of 896 dealer respondents from Jan. 29 to Feb. 12. “More dealers expect conditions to be strong in the future compared to those who believe conditions will be weak.”

“Dealers have very high expectations for the next 90 days, with positive views of the recent tax reform likely contributing to their optimism,” said Jonathan Smoke, Cox chief economist, in a press statement released just before the NADA national convention. “They expect their customers to have more disposable income and the U.S. economy to be stronger as a result.”

Other significant market improvements reflected in the Cox survey, Dealer Sentiment Index, include:

  • A decline in pressure to lower prices.
  • An increase in dealers’ ability to get credit.
  • Increases in new- and used-vehicle inventory levels.

“Perceptions of the new-car sales environment by franchise dealers remains one of the most positive areas of dealer sentiment,” Cox reported, with the index rising 17 points to 70 from 53 recorded in Q4.

The increase was similar among both franchise and independent dealers.

Sentiment among new-car dealers was higher than last quarter in most areas, including new-vehicle sales environment, new-vehicle inventory. Optimism was greater among both franchise and independent dealers responding to the Cox survey in describing the current used-vehicle sales environment and current used-vehicle inventory levels.

“The current market improved, but expectations for the market moving into the spring jumped even more dramatically,” said Smoke. “Dealers are optimistic by nature, so I expected stronger views for Q2 … [but] the strong optimism and high expectations surprised even me.”

Download a copy of the first-quarter Dealer Sentiment Index results at Cox Automotive.

Posted in News

Written by

Enjoy this Post?

Remember to subscribe to our RSS Feed and if you would like, please share this post.

Comments are closed.