Dealer optimism surges post-election

Optimism among auto dealers has surged by record proportions following the recent election, according to a report by Cox Automotive. Could it be a sign that the retail car market is indeed on the verge of a major turnaround? 

The details: The surge in optimism was revealed in the Q4 2024 Cox Automotive Dealer Sentiment Index (CADSI) survey, which was taken immediately after the national election in early November, indicating a sharp rise in how auto dealers feel about the business going into 2025. 

• The market outlook index, which measures dealers’ expectations for the auto retail market in the coming quarter, jumped to 54 in Q4 from 42 in Q3.

• A year ago, the index stood at just 41, one of the lowest readings in its history, according to Cox Automotive.

• The recent market outlook index of 54 is on par with Q2 2022 levels, says Cox Automotive Chief Economist Jonathan Smoke.

Between the lines: Cox Automotive’s Q4 sentiment report reveals a less positive outlook about the current auto retail market, with franchise dealers being more optimistic than used-only independent dealers.     

• Franchised dealers – who sell both new and used vehicles – posted a current market index score of 50, signaling an equal number of dealers that view the current market as strong as those that see it as weak.

• Independent dealers – who sell used vehicles only – scored the current market index at 39, more than 10 points lower than that of franchised dealers. 

Digging deeper: Cox Automotive’s CADSI survey revealed mixed feelings about many of the indexes that typically come to mind when gauging dealer optimism about the retail business, such as profits, costs, and pricing.

• The profit market index increased slightly in Q4, moving from 34 to 35, according to Cox Automotive.

• The cost index improved, falling from 77 to 71, which Cox Automotive says could indicate that some pressure may be easing.

• Price pressure fell slightly in Q4, from 66 to 63, although a majority of dealers continue to feel more pressure to lower prices.

Final note: The shift in dealer sentiment about the impact that politics have had on the auto retail business reveals some of the most startling differences between Q3 and Q4 following the national election, based on the Cox Automotive survey.  

• In Q4, 35% of dealers surveyed reported that the political climate is affecting their business.

• Prior to the election (Q3), 44% of all dealers and 49% of franchised dealers reported that the political climate affected their business.

Dealer optimism about the auto business going into 2025 is on par with business optimism overall post-election. Small-business optimism has soared to a more than three-year high following the national election.

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