NEW YORK — July's consumer confidence report delivers a mixed signal for independent auto dealers. While overall sentiment continues to soften, consumers' plans to purchase a vehicle are still trending upward—an encouraging sign for the used-car market.
According to the latest data from The Conference Board, the Consumer Confidence Index® declined 1.4 points in July to 90.8, continuing the gradual cooling trend that has persisted since late 2021. The Present Situation Index, which measures consumers' views of current business and labor market conditions, fell 3.6 points to 114.9, marking its third consecutive monthly decline. Meanwhile, the Expectations Index remained largely unchanged at 74.7, a level that continues to reflect cautious consumer sentiment.
Despite those softer headline numbers, the report also showed that consumers' intentions to purchase a vehicle continued to improve when measured on a six-month moving average, which smooths out month-to-month fluctuations. For independent dealers, that suggests demand remains more resilient than overall consumer confidence alone might indicate.
The report paints a picture of consumers becoming more cautious—not necessarily stepping away from major purchases. While inflation, employment concerns, and borrowing costs continue to weigh on sentiment, planned vehicle purchases appear to be holding up better than broader economic confidence, underscoring the importance of personal transportation for many households.
Critical Shifts from the July Report
- Labor Market Cooling: The share of consumers saying jobs are "plentiful" declined from 25.5% to 24.6%, while those saying jobs are "hard to get" remained at 21.5%.
- Inflation & Interest Rates: Twelve-month inflation expectations eased slightly, but 61.3% of consumers still expect interest rates to rise over the next year.
- Younger Buyers Remain More Confident: Consumers under 35—including Gen Z and Millennials—continued to report the highest confidence levels. Confidence among consumers ages 35 to 54 also improved on a six-month moving average.
- Vehicle Buying Intentions Continue to Improve: While overall economic sentiment weakened, consumers' plans to purchase homes and automobiles continued to strengthen on a six-month moving average basis.
What Does This Mean for Independent Auto Dealers?
1. Demand Appears Resilient, but Buyers Remain Price Conscious
While overall confidence remains subdued, continued improvement in vehicle buying intentions suggests many consumers are still planning major purchases despite economic uncertainty. For many households, reliable transportation remains a necessity, but affordability has become increasingly important.
Dealer Strategy: Maintaining a balanced inventory of affordable sedans, compact SUVs, and dependable commuter vehicles in the $15,000 to $20,000 range may help dealers appeal to budget-conscious shoppers who are focused on maximizing value and minimizing monthly expenses.
2. Payment Affordability Will Matter More
With more than 60% of consumers expecting interest rates to remain elevated or increase further, financing costs remain a significant concern. Dealers who clearly communicate financing options and affordable monthly payment scenarios may be better positioned to convert interested shoppers into buyers.
Dealer Strategy: Work closely with lending partners to offer flexible financing solutions across a range of credit profiles. Transparent payment calculators and financing information on dealership websites can also help move online shoppers further into the buying process before they visit the showroom.
3. Younger Buyers Continue to Present Opportunity
The Conference Board's data shows younger consumers continue to report relatively stronger confidence than older age groups. That may translate into greater willingness to replace aging vehicles or make first-time purchases, particularly among early-career buyers.
Dealer Strategy: Focus digital marketing efforts on channels that effectively reach younger consumers. Highlight reliable commuter vehicles, fuel-efficient models, and affordable entry-level SUVs that align with the priorities of first-time buyers and growing families.
4. Keep Inventory Moving
The Present Situation Index has now declined for three consecutive months, suggesting consumers are becoming more cautious about current economic conditions. While vehicle purchase intentions remain encouraging, shifts in labor market perceptions or borrowing costs could quickly affect demand.
Dealer Strategy: Monitor aging inventory closely, price vehicles competitively from the outset, and regularly review holding costs to protect profitability. Faster inventory turns can help dealers remain flexible if market conditions change.
July's consumer confidence report presents a nuanced outlook for independent dealers. Consumers remain cautious about the economy, but planned vehicle purchases continue to trend upward, suggesting demand has not disappeared—it has become more value driven.
