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Dealers More Optimistic About Used-Car Market vs. New

September 22, 2017

By Paul Clinton

Photo via order_242/Wikimedia (Creative Commons)
Photo via order_242/Wikimedia (Creative Commons)

ATLANTA — Franchise dealers now view the pre-owned market more optimistically than the new-vehicle market, according to a new sentiment index from Cox Automotive.

The finding speaks to the current shift of car buyers with prime and subprime credit toward the used market. The shift comes as the average new-vehicle loan payment reached a record $504, about a $139 difference from the average used-vehicle loan payment, according to a recent Experian Automotive finding.

Franchise dealers also have a markedly more optimistic view than their independent counterparts, as tracked by the Cox Automotive Sentiment Index, which debuted earlier this month.

The index covers the third quarter and reports data gathered from 1,033 dealer respondents during a survey between July 31 and Aug 7. The survey also included responses about the second quarter.

Dealers were asked to rate their sentiment on a scale of zero to 100, where zero is poor, 50 fair, and 100 good.

Franchise dealers rated the used-vehicle sales environment as 68 on average,  down from 70 in the second quarter. Independent dealers rated their sentiment as 53, up from 50 in the second quarter. Franchise dealers rated their used-vehicle inventory as 55, while independents rated it at 47.

Sentiment about new-vehicle sales was less optimistic. Franchise dealers rated sentiment at 57, and rated their sentiment about new vehicle inventory levels at 56.

Dealers haven't sounded the alarm about credit availability among their customers, but the issue is more acute with independent dealers. Franchise dealers listed credit as the eighth highest factor that's holding back their business, while independent dealers ranked it third. The top concerns were market conditions for franchise dealers and limited inventory for independent dealers.

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