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Economist Jonathan Smoke says dealer sentiment – at least that of franchised operators – “gives me hope for the months ahead.”

Franchised, Independent Car Dealers See Future Differently

“There’s a pronounced divergence” in how the two sets of auto retailers feel, says Jonathan Smoke, Cox Automotive’s chief economist.

Car dealers are known as optimists even when the going gets tough, but franchised dealers who sell both new and used vehicles appear more positive about the future than do counterpart independent operators who sell only used cars.

That’s according to Cox Automotive’s latest dealer sentiment survey. It shows marked differences between the two groups when they were asked how the automotive market will look this summer after taking a hit in the spring from the COVID-19 pandemic. Many state stay-at-home orders closed dealerships (or limited their operations), hurting vehicle sales.

Jonathan smoke (2).jpgAs to how franchised and independent dealers feel about impending business prospects, “there’s a pronounced divergence,” says Jonathan Smoke, chief economist for Cox Automotive, owner of Autotrader, Kelley Blue Book, Manheim auction chain, and other providers of digital services. (Smoke, left)

“More franchised dealers than not expect the market to be strong potentially through August,” he says. “Independents expect it to be weak.” In strong-weak index metrics, franchise dealers were at 57 points, independents at 40. “Independent dealers see the market far weaker than do franchise dealers,” Smoke says. “There’s a definite split.”

That contrast extends to other survey questions posed to the two sets of dealers.

In describing their used-car sales, the index numbers were 43 for franchise dealers and 20 for independents. (The index was 39 for franchise dealers describing their new-vehicle sales.)

As to their view of the current market, franchised dealers were at 30, independents at 17.

Smoke quips that franchised dealers’ relatively upbeat sentiment “gives me hope for the months ahead.”

He forecasts both franchised and used-car dealers will move into “positive territory” before long as sales improve.          

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