The latest Cox Automotive Dealer Sentiment Index remained stable from Q1 to Q2 2024 despite dealer uncertainty in the market and economy. The Q2 current market index score of 42 indicates most U.S. auto dealers see the market as weak. One year ago, the index was 45, also below the 50 threshold. The last time current market sentiment was above 50 – suggesting the market was strong – was Q2 2022.

Typically, the second quarter shows a decline in market expectations for the next three months, and Q2 2024 is no different. The market outlook index dropped from 51 in Q1 to 44, showing more dealers expect a weak market ahead. The downward trend is influenced by a weaker-than-normal tax refund season and ongoing political and economic uncertainty, leading to a cautious dealer outlook.

Cox Automotive Chief Economist Jonathan Smoke noted, “There is a lot of uncertainty in this market, leaving consumers and dealers alike unsure of the road ahead. On top of uncertainty about interest rates, we are heading into an election season, and this one is especially breeding more concern. In the auto business, uncertainty is the enemy – it negatively impacts sales, hurts consumer sentiment, and leaves auto dealers feeling troubled.”

Despite the market’s perceived weakness, the CADSI showed some promising signs in Q2. The profit index, for example, increased for the first time since Q3 2021. While still below the 50 threshold at 36, profit perceptions have stabilized. Additionally, both online and in-person customer traffic improved from Q1, with franchised and independent dealers reporting higher consumer traffic sentiment, though it remains weak.

Top Factors Holding Back Business Among All Dealers

“Overall, dealer sentiment is likely worse than actual market conditions,” Smoke said. “While profits are down from all-time highs, we still believe the dealer business is healthy. Retail vehicle sales have been fairly consistent so far this year, inventory has returned to reasonable levels, and we believe interest rates have likely hit a ceiling. With a good job market, the market is not collapsing, and we believe weak current market sentiment is more about uncertainty than actual performance.”