Profit fears darken outlook of car dealers, survey finds
Tariff threat drags down dealers
Monday September 10, 2018
Article Highlights
- Threats of tariffs on imported vehicles and parts have U.S. dealers worried about hits to their business should the extra tax be implemented.
- More than half of franchised dealers answering the Cox Automotive Dealer Sentiment Index survey for the third quarter expect that tariffs would negatively impact future profits. That was a key factor bringing down their level of optimism from the second quarter as it relates to business during the next three months.
- "Tariffs came out of nowhere to be right up there as one of the big things that have been negatives for dealers," Cox Chief Economist Jonathan Smoke told Automotive News. Beyond tariffs, dealers were more positive than negative in describing the current market, and franchised dealers' view of business today improved from the second quarter. Concerns about marketplace conditions, competition from other dealers and limited inventory were the top three factors cited as holding back business during the third quarter.
Threats of tariffs on imported vehicles and parts have U.S. dealers worried about hits to their business should the extra tax be implemented.
More than half of franchised dealers answering the Cox Automotive Dealer Sentiment Index survey for the third quarter expect that tariffs would negatively impact future profits. That was a key factor bringing down their level of optimism from the second quarter as it relates to business during the next three months.
“Tariffs came out of nowhere to be right up there as one of the big things that have been negatives for dealers,” Cox Chief Economist Jonathan Smoke told Automotive News.
Beyond tariffs, dealers were more positive than negative in describing the current market, and franchised dealers’ view of business today improved from the second quarter. Concerns about marketplace conditions, competition from other dealers and limited inventory were the top three factors cited as holding back business during the third quarter.
The survey gauges dealers’ perceptions of the past 90 days and expectations for the next three months. It identifies key factors affecting retailers’ optimism or pessimism.