Alex Tovstanovsky, proprietor of used-car supplier Prestige Motor Works, checks on stock together with his common supervisor Ryan Caton in Naperville, Illinois, May 28, 2020.
Nick Carey | Reuters
DETROIT — There’s a “renewed optimism” amongst U.S. automotive sellers heading into 2025, fueled by President-elect Donald Trump’s return to the White House in addition to constructive traits in rates of interest and automaker-backed gross sales incentives, Cox Automotive reported Wednesday.
But sellers aren’t feeling extra optimistic in regards to the sale of electrical automobiles, in line with Cox’s “This autumn 2024 Dealer Sentiment Index,” which relies on wide-reaching surveys of sellers after the U.S. presidential election in November.
“The outlook for EV gross sales within the coming months fell additional, with a majority of sellers suggesting gross sales would decline within the subsequent quarter. There is concern insurance policies by the brand new administration should not going to assist an already fragile enterprise,” in line with Cox.
Those potential coverage adjustments underneath the Trump administration might embrace much less federal funding for selling EVs, comparable to an finish to the present shopper credit score of as much as $7,500 for the acquisition of one of many automobiles, in addition to much less strict gasoline and emissions laws.
“We are getting clear suggestions that the tax credit are working in each the brand new and the used markets,” Cox Chief Economist Jonathan Smoke stated in a launch. “This is one thing that might change pretty quickly subsequent yr, so I believe the diminishing outlook is instantly tied to the at-risk standing of the EV tax credit.”
Auto supplier shares in 2024.
Cox’s market outlook index, which measures sellers’ expectations for the auto retail market within the coming quarter, jumped to 54 within the fourth quarter, up from 42 through the earlier quarter. The greater the quantity, the extra assured sellers are feeling about their companies.
Dealer responses are weighted by dealership sort and quantity of gross sales to intently replicate the nationwide supplier inhabitants. Data is used to calculate an index whereby a quantity over 50 signifies extra sellers view circumstances as robust or constructive slightly than weak or unfavourable.
“This vital enhance means that extra sellers consider the auto market shall be stronger within the subsequent three months. One yr in the past, the index stood at simply 41, one of many lowest readings in its historical past,” Cox stated in a launch.
Despite the constructive outlook, the present market index rating of 42 signifies {that a} majority of sellers nonetheless view the present retail auto market as weak, Cox famous. This rating is barely higher than one yr in the past, however stays nicely under pre-pandemic norms and long-term averages.
“The current decision of political uncertainty following the presidential election has cleared the trail for a extra optimistic outlook on future auto market circumstances,” Smoke stated. “Coupled with the potential for supportive measures comparable to tax rebates and the opportunity of decrease rates of interest, sellers are feeling extra hopeful in regards to the highway forward as we transfer into 2025.”
After the November election, 35% of sellers surveyed stated the political local weather within the U.S. is affecting their companies, a major drop from the 44% of all sellers and 49% of franchised sellers who stated the identical within the earlier quarter.
Shares of publicly traded auto sellers have carried out nicely this yr, as pricing of recent and used automobiles stays excessive. Shares of AutoNation, Lithia Motors and Sonic Automotive are up between 15% and 22% for the yr, whereas Group 1 Automotive is the standout, up roughly 40% in 2024.
