Independent dealers sour on slipping inventories | Auto Finance News | Auto Finance News

Independent dealers sour on slipping inventories

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Franchise auto dealers perked up their market outlook in the third quarter as independent dealers lowered expectations for market conditions, a Cox Automotive dealer sentiment report showed.

While used-vehicle sales continue to reach record levels, independent dealers reported that used-vehicle inventories are declining – a continued trend from the second quarter. In fact, limited used-vehicle inventory was one of the leading factors influencing independents’ pessimistic view, the report noted. Meanwhile, franchise dealers said used-vehicle inventories grew in the third quarter and used-vehicle sales outpaced new-car sales.

Market sentiment among franchise dealers, which sell both new and used vehicles, inched up 2 points to 56 in the third quarter. However, the market outlook worsened among independent used-car dealers, dropping 2 points to 46. A number higher than 50 on the index is considered strong.

Overall, the current market index, which is a measure of business conditions, decreased to 48 in the third quarter from 49 in the second. It was expected to hit 55 in the third quarter, according to Cox’s Q2 survey. “Dealers are becoming less optimistic as they consider the future,” Cox Automotive Chief Economist Jonathan Smoke said in the report.

Data for the dealer sentiment index was collected from 1,115 U.S. auto dealer respondents from Aug. 6 to Aug. 18.

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