Alex Tovstanovsky, owner of used-car dealer Prestige Motor Works, checks inventory with his general manager, Ryan Caton, on May 28, 2020 in Naperville, Illinois.
Nick Carey | Reuters
DETROIT – There is a “new optimism” among U.S. car dealers heading into 2025, thanks to President-elect Donald Trump’s return to the White House as well as positive trends in interest rates and automaker-backed sales incentives, Cox Automotive reported Wednesday.
But dealers aren’t feeling too optimistic about electric vehicle sales, according to Cox’s “Q4 2024 Dealer Sentiment Index,” based on a broad survey of dealers after the U.S. presidential election in November.
“The outlook for EV sales in the coming months is further down, with most dealers suggesting that sales will decline in the coming quarters. The new administration’s worrisome policies will not help an already fragile business,” according to Cox.
These potential policy changes under the Trump administration could include less federal funding to promote EVs, such as an end to current consumer loans of up to $7,500 to purchase a vehicle, as well as less stringent fuel and emissions regulations.
“We’re getting clear feedback that tax credits are working in both the new and used markets,” Cox chief economist Jonathan Smoke said in a statement. “That’s something that could change fairly quickly next year, so I think the decline outlook is directly tied to the risky nature of EV tax credits.”
Auto Dealer Stocks in 2024
The Cox Market Outlook Index, which measures dealers’ expectations for the auto retail market in the coming quarter, jumped to 54 in the fourth quarter, up from 42 in the previous quarter. The higher the number, the more confident traders feel about their business.
Dealer responses are weighted by dealership type and sales volume to closely reflect the national dealer population. The data is used to calculate an index where numbers above 50 indicate that more dealers view conditions as strong or positive rather than weak or negative.
“This significant increase indicates 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 in a release.
Despite the positive outlook, the Current Market Index score of 42 indicates that most dealers still view the current retail auto market as weak, Cox noted. This 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 paved the way for a more optimistic outlook on future auto market conditions,” Smoke said. “Coupled with the prospect of supportive measures such as tax concessions and the prospect of lower interest rates, dealers are feeling more optimistic about the road ahead as we head into 2025.”
After the November election, 35% of dealers surveyed said the U.S. political climate was affecting their business, a significant drop from 44% of all dealers and 49% of franchised dealers who said the same in the previous quarter.
Shares of publicly traded auto dealers have performed well this year as new and used vehicle prices remain high. share of Autonation, Lithia Motors And Sonic Automotive While up between 15% and 22% for the year Group 1 motor vehicles Standout, up nearly 40% in 2024.
