Nick Carey | Reuters
But dealers aren’t feeling too optimistic about electric vehicle sales, according to Cox Q4 2024 Dealer Sentiment IndexIt is based on a wide-ranging survey of dealers after the US presidential election in November.
According to Cox, “The outlook for EV sales fell further in the coming months, with a majority of dealers suggesting that sales will decline in the next quarter.
These potential policy changes under the Trump administration could include less federal funding to promote EVs, such as ending the current User credit Up to $7,500 towards the purchase of one of the vehicles, as well as less stringent fuel and emissions regulations.
“We’re getting clear indications that tax credits are working in both the new and used markets,” Cox Chief Economist Jonathan Smoak said in a release. “That’s something that could change quite quickly next year, so I think the reduced outlook is directly tied to the risk-adverse status of EV tax credits.”
Auto Dealer Stocks in 2024
Cox’s market outlook index, which gauges dealers’ expectations for the auto retail market in the coming quarter, rose to 54 in the fourth quarter, up from 42 during the previous quarter. The higher the number, the more confident the dealer is feeling about their business.
Dealer responses are weighted by dealership type and sales volume to more closely reflect the national dealer population. The data is used to calculate an index in which a number above 50 indicates that more dealers view conditions as strong or positive rather than weak or negative.
“This significant increase suggests that more dealers believe the auto market will strengthen over the next three months. A year ago, the index stood at just 41, one of the lowest readings in its history,” Cox said. said in a release.
Despite the positive outlook, the current Market Index score of 42 indicates that the majority of dealers still view the current retail auto market as weak, Cox noted. The score is slightly better than a year ago, but well below pre-pandemic norms and long-term averages.
“The recent resolution of political uncertainty following the presidential election has cleared the way for a more optimistic view of future auto market conditions,” Smoak said. “Coupled with the prospect of supportive measures such as tax breaks and the prospect of lower interest rates, dealers are feeling more optimistic about the road ahead heading into 2025.”
After the November election, 35% of dealers surveyed said the political climate in the U.S. was affecting their business, down significantly from 44% of all dealers and 49% of franchised dealers who said the same in the previous quarter. had said
Shares of publicly traded auto dealers have performed well this year, as new and used vehicle prices are higher. Shares of Auto Nation, Lithia Motors And Sonic Automotive are between 15% and 22% for the year, while Group 1 Automotive stands out, nearly 40 percent higher in 2024.