The Cox survey asks auto retailers how they perceived the past 90 days, gauges their outlook for the next three months and identifies key factors affecting their optimism or pessimism.
Cox surveyed 1,100 dealers — 576 franchised dealers and 524 independent dealers — for the third quarter. 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.
Overall, dealers’ sentiment about the vehicle market in the third-quarter survey cooled though was still positive — scoring 62, down from 67 in the second quarter but up from 56 in the third quarter of 2020. Franchised dealers had a stronger view of the market than independent dealers, rating it 73 — down from 77 in the second quarter but up from 68 in the year-ago quarter. Franchised dealer outlook for the next 90 days was slightly below the current market view, at 71, though that still is considered robustly positive.
Among franchised dealers, sentiment around profitability scored a record 86, up 4 points from the second quarter and up from 66 in the third quarter of 2020. It was the highest score on any metric in the history of the dealer sentiment survey, according to Cox.
Franchised dealers had a negative view of used-vehicle inventory levels, which scored 35 in the third quarter, though that was an improvement from 25 in the second quarter. It also was a sunnier view than for new-vehicle inventory levels, which scored 13 in the third quarter.
Michelle Krebs, executive analyst for Cox Automotive, said it’s still unknown at what point the chip shortage — and thus new-vehicle shortfalls — bottom out. Demand may be continuing to build and giving dealers optimism, she said.
“There’s a big group of consumers who are ready to buy. They want to buy. They have the means to buy. But they’re holding off because there isn’t anything to buy and not at the price point they want,” Krebs said. “The desire is there, and the ability is there. It’s just that the product’s not there.”