Dealer Sentiment Index - Cox Automotive Inc.€¦ · dealer population. Data is used to calculate...
Transcript of Dealer Sentiment Index - Cox Automotive Inc.€¦ · dealer population. Data is used to calculate...
ThDealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 9
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 9
BackgroundData for the Cox Automotive Dealer Sentiment Index (CADSI) is gathered via a quarterly online survey of franchised and independent auto dealers.
Dealer responses are weighted by dealership type and volume of sales to closely reflect the national dealer population. Data is used to calculate an index wherein a number over 50 indicates more dealers view conditions as strong or positive rather than weak or negative.The Q3 2019 CADSI is based on 1,115 U.S. auto dealer respondents, comprising 595 franchised dealers and 520 independents. The survey was conducted from August 6 to August 18, 2019. The CADSI was first published in Q3 2017. The next quarterly report will be released in December 2019.
Dealer Sentiment Index Q3 2019 2
Key TakeawaysAccording to the Q3 2019 Cox Automotive Dealer Sentiment Index (CADSI), U.S. automobile dealers view the current market as negative, with an index score of 48. The slight decrease from Q2’s score of 49 was not statistically significant. The index reading of 48 indicates that slightly more dealers feel that the current market is weak compared to the number who feel the current market is strong.
Expectations for the next quarter fell in the Q3 survey as well, but remain in positive territory with an index score of 51. The decline in expectations was statistically significant from last quarter’s score of 55, and it was driven by a decline in expectations by both franchised and independent dealers.
Year-over-year comparisons reveal an important contrast among dealers in expectations for the next quarter.
3Dealer Sentiment Index Q3 2019
Franchised dealers saw a decline, but remained in positive territory. Independent dealers, on the other hand, saw a larger decline, and their expectations score fell below 50 for only the second time since the CADSI began in Q2 2017.
“Dealers are becoming less optimistic as they consider the future,” said Cox Automotive Chief Economist Jonathan Smoke. “We also continue to see a big difference in outlook by type of dealer, as sentiment consistently skews more positive for franchises compared to independents.”
For franchises, the current new-vehicle sales index was also down compared to last year, but stable compared to last quarter. The new-vehicle sales index remains above 50 indicating a good market. Franchises continue to see the used-vehicle sales as stronger than
new. They also report both new- and used- vehicle inventory continues to grow.
For independents, the used-vehicles sale index in Q3 was negative at 49, a score slightly lower than last quarter and Q3 2018. Factors influencing a pessimistic view of the current market are the perception of a weakening economy, consumers being less interested or more cautious about purchasing vehicles, and having a hard time to find inventory or having a lack of used-vehicle inventory.
When asked about factors holding back the business, dealers in aggregate reported no change from Q2 to Q3. Market Conditions remained in the top spot as the most cited negative factor. Competition remained in second place. Limited Inventory remained number 3, followed by Credit Availability for Consumers and Expenses.
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 9
Strong
Weak
48
4546
49
51 51
44
4849
48
5455
5455
56
59
5150
54
56
46
4243
47
50
48
42
4748
46
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise Independent
Q1: How would you describe the current market for vehicles in the areas where you operate?
4
Note: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Strong
Weak
Q2: What do you expect the market for vehicles in your area to look like 3 months from now?
5
55
5253
70
5657
49
63
55
51
64
57 57
73
69
61
54
62 62
57
5251
52
70
52
55
47
63
52
49
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Strong
Weak
Q3: How do you rate the customer traffic to your dealership over the past 3 months?
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3837
3435
4041
33
35
42
40
4342
45
4344
46
41
38
45
47
36 36
31
33
39 39
30
33
41
37
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Strong
Weak
Q4: How would you describe your profits over the past 3 months?
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44
41 41 4143
42
38 38
4442
4850
49 4951
49 49
43
5152
43
38 38 38
4140
3536
42
38
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise Independent Note: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Easy
Difficult
Q5: How would you describe your ability to get credit to operate your business over the past 3 months?
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59
55
57
61
59 5960 60
6160
6766
68
70
65
67
6968
6766
56
52
54
5857 57 57
5859 59
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Growing
Declining
Q6: How would you describe the cost of running your dealership over the past 3 months?
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6968
67 67
70
6768
69
6665
69 69 6968
70
67
6970
67 67
70
6766 66
69
6768
69
6665
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Good
Poor
Q7: How would you describe the current new-vehicle sales environment?
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57 57
61
65
5960
57
5354
55
57 57
61
65
5960
57
5354
55
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall FranchiseNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Q8: How would you describe the current new-vehicle inventory levels?
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67
62
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57
5960
64
61
67
62
68
61
57
5960
64
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Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall FranchiseNote: Scale 1 - 100
Growing
Declining
Dealer Sentiment Index Q3 2019
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Q9: How would you describe the current new-vehicle inventory mix?
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7572
7572
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall FranchiseNote: Scale 1 - 100
Good
Poor
Dealer Sentiment Index Q3 2019
Note: New question introduced in Q2 2019
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Q10: How would you describe the current used-vehicle sales environment?
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5557
5556
5557
5153
5655
7068
6769
72 72
6866
7273
50
5351
5250
52
4648
5149
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Good
Poor
Dealer Sentiment Index Q3 2019
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Growing
Declining
Q11: How would you describe the current used-vehicle inventory levels?
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51
53
59
4948 48
54
4647
55 55
62
58
52
54
62
5354
50
53
58
4546 46
52
44 44
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Q12: How would you describe the current used-vehicle inventory mix?
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63 63
6665
62 62
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Good
Poor
Dealer Sentiment Index Q3 2019
Note: New question introduced in Q2 2019
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More
Less
Q13: How much pressure do you feel to lower your prices?
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6463
67
62
6463
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6364
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67 67
62
6665
67 6766
65
6362
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6263 63
66
6263
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Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Growing
Declining
Q14: How would you describe your dealership's current staffing levels?
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52 52 52
54
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50 50
48
5049
5655 55
60
55
5352
5354
53
5051 51
5251
49 49
47
4948
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
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Large
Small
Q15: How would you describe the current level of OEM new-vehicle incentives?
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4848
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
Note: New question introduced in Q3 2019.
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Strong
Weak
Q16: How would you describe the current U.S. economy?
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555555
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
Note: New question introduced in Q3 2019.
Overall: 55Franchise: 55Independent: 55
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Factors Holding Back Your Business?
Significant decrease vs previous quarter
Significant increase vs previous quarter
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 9
OVE
RA
LL R
AN
K
Q3 ’19 Q2 ’19 Q3 ‘181 Market Conditions 38% 40% 37%2 Competition 33% 35% 35%3 Limited Inventory 31% 33% 38%3 Credit Availability for Consumers 31% 31% 35%4 Expenses 25% 29% 29%5 Economy 23% N/A N/A6 Political climate 14% N/A N/A6 Consumer Confidence 14% 13% 16%7 Consumer Transparency in Pricing 11% 12% 15%7 Interest Rates 11% 16% 17%8 Weather 10% N/A N/A9 Staff Turnover 9% 12% 12%10 Credit Availability for Business 7% 6% 9%10 Regulations 7% 7% 7%10 Too Much Retail Inventory 7% 7% 5%11 Tariffs on Imported Vehicles and Parts 5% 4% 5%11 Dealership Systems/Tools 5% 5% 7%12 Lack of consumer incentives from my OEM 4% N/A N/A13 OEM Mandates/Restrictions 3% 4% 5%
Dealer Sentiment Index Q3 2019
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Factors Holding Back Your Business?
Significant decrease vs previous quarter
Significant increase vs previous quarter
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 9
Q3 ’19 Q2 ’19 Q3 ‘181 Market Conditions 37% 39% 40%2 Competition 36% 37% 37%3 Economy 26% N/A N/A4 Staff Turnover 22% 25% 28%5 Credit Availability for Consumers 21% 23% 23%6 Expenses 20% 21% 25%6 Limited Inventory 20% 19% 28%8 Political climate 19% N/A N/A9 Lack of consumer incentives from my OEM 18% N/A N/A10 Consumer Confidence 17% 22% 20%10 Interest Rates 17% 26% 22%12 OEM Mandates/Restrictions 14% 17% 21%13 Consumer Transparency in Pricing 11% 12% 18%13 Weather 11% N/A N/A14 Tariffs on Imported Vehicles and Parts 8% 6% 7%15 Dealership Systems/Tools 7% 7% 12%16 Too Much Retail Inventory 5% 6% 3%17 Regulations 4% 4% 5%18 Credit Availability for Business 2% 1% 2%
Dealer Sentiment Index Q3 2019
FRA
NC
HIS
ED D
EALE
RS
22
Factors Holding Back Your Business?
Significant decrease vs previous quarter
Significant increase vs previous quarter
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 9
Q3 ’19 Q2 ’19 Q3 ‘18
1 Market Conditions 38% 40% 36%
2 Limited Inventory 35% 38% 41%
3 Credit Availability for Consumers 34% 33% 39%
4 Competition 32% 34% 34%
5 Expenses 27% 31% 30%
6 Economy 22% N/A N/A
7 Consumer Confidence 12% 11% 15%
7 Political climate 12% N/A N/A
8 Consumer Transparency in Pricing 11% 13% 13%
9 Weather 10% N/A N/A
10 Credit Availability for Business 9% 7% 12%
10 Interest Rates 9% 13% 15%
11 Regulations 8% 8% 7%
12 Too Much Retail Inventory 7% 7% 5%
13 Staff Turnover 5% 7% 7%
14 Dealership Systems/Tools 4% 5% 5%
14 Tariffs on Imported Vehicles and Parts 4% 4% 4%
Dealer Sentiment Index Q3 2019
IND
EPEN
DEN
T D
EALE
RS
The Effect of Automotive Tariffs
Dealer Sentiment Index Q3 2019 23
Dealer Sentiment IndexT H I R D Q U A R T E R 2 0 1 9
Positive
Negative
Q: Will a tariff on imported vehicles have a positive or negative impact on your business
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37 36 37 37 36
27 2628 28
25
40 39 40 40 39
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Overall Franchise IndependentNote: Scale 1 - 100
Dealer Sentiment Index Q3 2019
Q: Which of the following best describes the impact on your business’ profitability next quarter if tariffs are imposed on imported vehicles and parts?
Dealer Sentiment Index Q3 2019
Import Tariff Impact (Full Breakout)Q3 ’19 Q2 ’19
OVERALLPositive Impact 8% 9%
No Impact 56% 55%
Negative Impact 36% 36%
FRANCHISE (A)
Positive Impact 8% 8%
No Impact 33% 39%
Negative Impact 59% B 53%
INDEPENDENT (B)Positive Impact 8% 10%
No Impact 63% A 60%
Negative Impact 29% 30%
Arrows indicate significant increase vs previous quarterArrows indicate significant decrease vs previous quarter
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A/B indicates significant difference between groups
Q: What, if any, negative impacts would imposing tariffs on imported vehicles and parts have on your business? Please select all that apply.
Dealer Sentiment Index Q3 2019
Negative Impact of Import Tariffs – OverallQ3 ’19 Q2 ’19
Higher prices on all used vehicles as market adjusts 56% 56%
Higher prices on imported vehicles 52% 55%
Higher prices on all new vehicles as market adjusts 41% 45%
Higher prices on domestic vehicles 30% 24%
Lower (or delayed) used vehicle sales 24% 19%
Lower (or delayed) new vehicle sales 22% 23%
Other 8% 4%
No concerns 2% 4%
Arrows indicate significant increase vs previous quarterArrows indicate significant decrease vs previous quarter
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Q: What, if any, positive impacts would imposing tariffs on imported vehicles and parts have on your business? Please select all that apply.
Dealer Sentiment Index Q3 2019
Positive Impact of Import Tariffs – Overall
Arrows indicate significant increase vs previous quarterArrows indicate significant decrease vs previous quarter
27
Q3 ’19 Q2 ’19
Increased traffic for used vehicles 56% 57%
Increased margin on all used vehicles as market adjusts 36% 46%
Will make the market stronger overall 28% 25%
Increased domestic vehicles sales 24% 19%
Increased margin on all vehicle repairs as market adjusts 14% 4%
Increased margin on all new vehicles as market adjusts 9% 10%
Other 2% 2%
No positive impact 21% 19%
Q: What, if any, negative impacts would imposing tariffs on imported vehicles and parts have on your business? Please select all that apply.
Dealer Sentiment Index Q3 2019
Negative Impact of Import Tariffs – Franchise
Arrows indicate significant increase vs previous quarterArrows indicate significant decrease vs previous quarter
28
Q3 ’19 Q2 ’19
Higher prices on all used vehicles as market adjusts 45% 45%
Higher prices on imported vehicles 62%* 59%
Higher prices on all new vehicles as market adjusts 64%* 65%*
Higher prices on domestic vehicles 35% 27%
Lower (or delayed) used vehicle sales 13% 12%
Lower (or delayed) new vehicle sales 41%* 36%*
Other 4% 5%
No concerns 3% 3%
* Significant difference from Independent Dealers
Dealer Sentiment Index Q3 2019 29
Q: What, if any, positive impacts would imposing tariffs on imported vehicles and parts have on your business? Please select all that apply.
Positive Impact of Import Tariffs – Franchise
Arrows indicate significant increase vs previous quarterArrows indicate significant decrease vs previous quarter
Q3 ’19 Q2 ’19
Increased traffic for used vehicles 33% 35%
Increased margin on all used vehicles as market adjusts 29% 24%
Will make the market stronger overall 36% 23%
Increased domestic vehicles sales 36% 43%*
Increased margin on all vehicle repairs as market adjusts 30%* 13%*
Increased margin on all new vehicles as market adjusts 38%* 23%
Other 6% 10%
No positive impact 20% 17%
* Significant difference from Independent Dealers
Q: What, if any, negative impacts would imposing tariffs on imported vehicles and parts have on your business? Please select all that apply.
Dealer Sentiment Index Q3 2019
Negative Impact of Import Tariffs – Independent
Arrows indicate significant increase vs previous quarterArrows indicate significant decrease vs previous quarter
30
Q3 ’19 Q2 ’19
Higher prices on all used vehicles as market adjusts 63%* 61%*
Higher prices on imported vehicles 46% 54%
Higher prices on all new vehicles as market adjusts 27% 34%
Higher prices on domestic vehicles 27% 22%
Lower (or delayed) used vehicle sales 31%* 23%*
Lower (or delayed) new vehicle sales 10% 16%
Other 10%* 3%
No concerns 2% 5%
* Significant difference from Franchised Dealers
Q: What, if any, positive impacts would imposing tariffs on imported vehicles and parts have on your business? Please select all that apply.
Dealer Sentiment Index Q3 2019
Positive Impact of Import Tariffs – Independent
Arrows indicate significant increase vs previous quarterArrows indicate significant decrease vs previous quarter
31
Q3 ’19 Q2 ’19
Increased traffic for used vehicles 64%* 63%
Increased margin on all used vehicles as market adjusts 39% 52%
Will make the market stronger overall 25% 25%
Increased domestic vehicles sales 20% 12%
Increased margin on all vehicle repairs as market adjusts 9% 1%
Increased margin on all new vehicles as market adjusts 0% 6%
Other 0% 0%
No positive impact 22% 20%
* Significant difference from Franchised Dealers
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Contact Information:
Dara HailesManager, Public RelationsCox [email protected]
Mark SchirmerDirector, Public RelationsCox [email protected]
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