Alongside affordability challenges, high interest rates and difficulty obtaining credit for customers have clouded dealers' typically rosy outlooks, according to Cox Automotive's Dealer Sentiment Index survey.
The fourth-quarter shift marks the first time that more dealers have expressed the current market was weak rather than strong since Cox began reporting survey results in the third quarter of 2017.
The survey, which measured responses from 1,124 franchised and independent dealers from Oct. 24 to Nov. 6, tracks how dealers view their current market on a scale from weak to strong. A score higher than 50 indicates optimism. Overall, dealers scored the current market at 44. Though franchised dealers reported in positive territory at 51, independent dealers dragged down the average, with a score of 42.
For franchised dealers, credit availability for consumers and interest rates were not even in the top five list of factors holding business back last year, according to Cox Chief Economist Jonathan Smoke.
Concerns over interest rates jumped year over year, with 38 percent of dealers citing it as a problem in the fourth quarter, compared with just 5 percent a year earlier. In the third quarter, 22 percent of franchised dealers cited interest rates as a problem.
"Something clearly made franchises wake up to interest rates," Smoke told Automotive News.