While new-vehicle inventory levels are still near historic lows, franchised dealers answering the latest Cox Automotive Dealer Sentiment Index survey indicated that the supply situation is starting to improve and profits remain strong.
On the whole, dealers who participated in Cox's first-quarter survey viewed market conditions as favorable ahead of the key spring sales season. Independent dealers were more optimistic about the market than they were in the fourth-quarter survey late last year, while franchised dealers held the same positive attitude observed then.
Though polling took place in late January and early February, before Russia invaded Ukraine, an action that has roiled the global economy, that positive sentiment about business for the next three months might still be justified, Cox experts said.
"As we enter the spring market, we can see the small green shoots of optimism from the U.S. auto dealers," Cox Automotive Chief Economist Jonathan Smoke said in a statement. "Most dealers have weathered the storm well, and we suspect there is hope the pandemic may finally be waning. Views of the economy weakened modestly, but dealer profits are still strong and demand remains robust. Those are good signs for the industry."
Cox surveyed 1,146 dealers — 591 franchised and 555 independent — from Jan. 24 to Feb. 7, asking retailers' thoughts on the past 90 days and their outlook on the three months ahead and identifying the factors affecting their optimism or pessimism. Cox weighs responses by dealership type and sales volume to calculate a diffusion index. An index number greater than 50 indicates dealers view conditions as positive.