New automotive gross sales have accelerated in 2024, however the individuals promoting these vehicles don’t really feel any higher. A survey of automotive sellers finds them down in regards to the present market and anxious about their future.
Cox Automotive’s newest Seller Sentiment Index finds automotive sellers feeling pessimistic because the second quarter of 2024 wraps up.
In regards to the Survey
Cox Automotive is the dad or mum firm of Kelley Blue Ebook. Its researchers survey sellers quarterly. The outcomes could be useful for customers when gauging when to buy and find out how to negotiate. If you realize the vendor throughout the desk expects to promote each automotive with ease, you might have restricted negotiating energy. If you realize they’re nervous about their future, you might have extra room to haggle.
Researchers surveyed 1,026 sellers – 550 from franchised networks and 476 from unbiased dealerships – about their expectations for the trade.
Researchers convert vendor solutions into numerical values. A rating of fifty is impartial. Scores above 50 point out optimism, and scores under 50 present doubts.
Sellers: Nothing Is Getting Higher
The typical vendor’s solutions for the second-quarter survey amounted to a rating of 42 — equivalent to first-quarter outcomes and never removed from their early COVID-19 pandemic low of 40.
One yr in the past, the index was 45, under the 50 threshold. The final time present market sentiment was above 50, suggesting the market was sturdy, was in Q2 2022.
Final quarter, sellers anticipated their scenario to be higher by now. In Q1, they rated expectations for Q2 at 51. Now, they’ve settled into longer-term pessimism. Expectations for the third quarter rated only a 44, displaying sellers count on a poor gross sales summer time.
“There may be numerous uncertainty on this market, leaving customers and sellers alike not sure of the highway forward,” says Cox Automotive Chief Economist Jonathan Smoke. “On prime of uncertainty about rates of interest, we’re heading into an election season, and this one is particularly breeding extra concern. Within the auto enterprise, uncertainty is the enemy – it negatively impacts gross sales, hurts client sentiment, and leaves auto sellers feeling troubled.”
Sellers really feel worse in regards to the market than the numbers recommend they need to. They rated their present income at 36 — low however the highest quantity in almost three years. The final time sellers rated income greater was within the third quarter of 2021.
Negotiating Leverage
“Total, vendor sentiment is probably going worse than precise market situations,” notes Smoke.
With few exceptions (we’re you, Toyota, and Honda), sellers have an oversupply of latest vehicles to promote.
As unsold vehicles pile up, factories and dealerships flip to reductions to maneuver them off the lot. Incentives have risen by way of 2024 because the auto trade has an unrelenting backlog.
Sellers consider that the scenario gained’t change anytime quickly. They gave their inventories a median rating of 69 – the best within the survey’s historical past.
Worries: Curiosity Charges, Financial system, Election Yr Politics
Requested what holds again their enterprise, auto sellers in Q2 centered on Curiosity Charges, the Financial system, and Market Circumstances. These are the identical prime three elements as final quarter and final yr.
Nevertheless, because the U.S. presidential election in November approaches, the political local weather continues to extend as an element impacting enterprise. Within the newest survey, 36% of sellers cited the political local weather as an element holding again enterprise, up from 33% in Q1 and 29% one yr in the past.
Smoke commented, “In some ways, the Political Local weather is a surrogate for ‘uncertainty.’ Many sellers and customers consider the election consequence will impression the financial system and the auto market not directly – both good or unhealthy – and that expectation of change is inflicting paralysis available in the market and hurting sentiment.”
