FI showroom red and grey logo
MenuMENU
SearchSEARCH

Cox Automotive Dealer Sentiment Index: With COVID-19 Concerns Mostly in the Rearview Mirror, Auto Dealers’ Attention Turns to Inflation, High Costs and Tight Inventory

U.S. automobile dealer sentiment in the second quarter of 2022 softened as U.S. auto dealers’ attention turned to inflation, high costs and tight inventory, marking the fourth straight quarter-over-quarter decline in market sentiment.

June 16, 2022
Cox Automotive Dealer Sentiment Index: With COVID-19 Concerns Mostly in the Rearview Mirror, Auto Dealers’ Attention Turns to Inflation, High Costs and Tight Inventory

U.S. automobile dealer sentiment in the second quarter of 2022 softened as U.S. auto dealers’ attention turned to inflation, high costs and tight inventory, marking the fourth straight quarter-over-quarter decline in market sentiment. 

4 min to read


U.S. automobile dealer sentiment in the second quarter of 2022 softened as U.S. auto dealers’ attention turned to inflation, high costs and tight inventory, marking the fourth straight quarter-over-quarter decline in market sentiment. The current market index peaked at 67 in Q2 2021 and has been trending downward since. Still, at 54, the current market index remains above the positive threshold of 50 in the Cox Automotive Dealer Sentiment Index (CADSI).

The key drivers of sentiment saw disparate shifts in Q2. The 3-month, forward-looking market outlook index sharply dropped from the previous quarter and, at 53, is well below the 63 recorded a year ago in Q2 2021. The economy index increased slightly in Q2 to 50, up from 49 in the prior quarter. With the index now at 50, dealers are right at the positive threshold in judging the economy as strong.

Ad Loading...

“U.S. auto dealers are certainly feeling the pressure of inflation and tight inventory,” said Cox Automotive Chief Economist Jonathan Smoke. “Franchised dealers continue to be very profitable, but the steep drop in the market outlook index indicates dealers are less enthused about the future. While all dealers are impacted by higher costs of doing business, the profit story is also different for independent dealers, as used vehicles have started depreciating again.”

The Q2 2022 CADSI research was in market from April 25 to May 9, 2022, when COVID cases had retreated from omicron-driven records and activity was normalizing compared to the situation in January.

INVENTORY CONTINUES TO IMPACT SALES

One worrisome sign in the latest CADSI report is the small improvement in the new-vehicle inventory mix index for franchised dealers. The index increased only two points from Q1 and remains historically low at 25, an eight-point year-over-year decrease.

“Today’s market continues to be framed by constrained new-vehicle inventory,” added Smoke. “Low new-vehicle inventory and the associated low level of incentives and lack of discounting have priced many would-be buyers out of the market and into the used-vehicle market. Others may be delaying purchases, waiting for supply to improve, but supply has yet to see much change.”  

Ad Loading...

On the used-vehicle side, the inventory index dropped in Q2 2022 to 35, one point lower than the previous quarter but up fourteen points year over year. The used-vehicle inventory mix index improved among franchised dealers versus independent dealers, showing a 5-point increase year over year in Q2 to 55. All index scores associated with inventory, however, remain below the 50 threshold, indicating dealers are still facing significant inventory challenges for both new and used vehicles. Consistent with last quarter, Limited Inventory ranks as the No. 1 factor holding back dealer business in Q2.

While new-vehicle inventory remains tight, the view of new-vehicle sales improved, increasing from 50 to 52, meaning dealers are now more optimistic about new-vehicle sales. One year ago, the index score was 65, meaning significantly more dealers saw the market as good. The new-vehicle incentives index dropped by two points quarter over quarter to 21, the lowest level since the question was added to the CADSI in Q3 2019.

On the other hand, the used-vehicle sales index fell five index points to 47. For franchised dealers, the used-vehicle sales index increased by one point for Q2, breaking a downward streak but is still below year-ago levels. For independent dealers, the index fell six points from the previous quarter to 42 and is down 14 points from a year ago. Overall, most dealers view used-vehicle sales as weak.

DEALERS WORRIED ABOUT THE ECONOMY AND COSTS

In Q2 2022, the cost index – specifically the cost of running a dealership – was at the highest level since the survey began in 2017. After reaching a record low in Q2 2020 of 51 at the height of the pandemic, the cost index has been steadily increasing. Overall inflation in the U.S. economy is clearly contributing to this view. The Economy is the second leading factor impacting dealer business at 46%, up from 37% in Q1, with Market Conditions, Expenses and Political Climate following closely behind. Dealers are worried about inflation and the possibility of a recession along with lagging consumer confidence.

Ad Loading...

More Auto Finance

A fan of $100 bills sitting on a white envelope
Auto Financeby Hannah MitchellAugust 12, 2026

July Was Hot for Auto Borrowers

Credit proved readily available for many, but most loans left buyers in negative territory, Cox Automotive said.

Read More →
stacks of coins, a calculator, paperwork, and a pair of glasses in the background, text Lender Experience Drives Dealer Decisions, F&I and Showroom
Auto Financeby Lauren LawrenceAugust 12, 2026

Dealer Lender Preferences Revealed

When lenders provide consistent, fast service, their overall satisfaction scores with dealers greatly improve, according to JD Power research.

Read More →
man sitting at desk using a calculator
Auto Financeby Lauren LawrenceAugust 10, 2026

Auto Refi Savings Surge

Consumers with 84-month auto loan terms who refinanced saved the most on monthly payments, according to a new report by auto refinancing provider Caribou.

Read More →
Ad Loading...
Tiny toy car in front of small stacks of coins
Auto Financeby Hannah MitchellAugust 5, 2026

Subaru Enters Lending Business

The automaker follows other brands in adding captive financing in the U.S., and says the move will strengthen its position here.

Read More →
Man climbing ladder in front of mountain landscape.
Auto Financeby Lauren LawrenceAugust 3, 2026

Positive Equity Reaches Record High

Mainstream vehicle owners who bought a car seven years ago are likely to have positive equity when trading in for a new vehicle, according to second-quarter Edmunds data.

Read More →
Photo of document next to calculator and inkpen
Auto FinanceJuly 20, 2026

Dealerships Are Paying the Price for Extended Car Loans

Growing negative-equity scenarios mean such lengthy terms should be addressed in a forward-looking way to make them work for the dealer and the consumer down the road.

Read More →
Ad Loading...
silver car in background with hand in front holding out a set of keys, Trade-In Trouble, F&I and Showroom
Auto Financeby Lauren LawrenceJuly 20, 2026

Trade-Ins in Negative Equity Reach New Heights

As such trade-ins rise in frequency, so do monthly loan payment amounts and interest rates, according to second-quarter data compiled by Edmunds.

Read More →
Two men in suit jackets shaking hands in front of a new-looking white vehicle
Auto Financeby Hannah MitchellJuly 15, 2026

Auto Credit Plentiful

June numbers show lenders are readily granting access, including to risky borrowers, as consumers leverage themselves to take on high prices.

Read More →
Woman's hands holding an wallet empty of cash
Auto Financeby Hannah MitchellJuly 1, 2026

Automotive Consumers Sink Further in Debt

Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.

Read More →
Ad Loading...
Three men smiling for headshots
Auto Financeby Lauren LawrenceJuly 1, 2026

Porsche Financial Services Shifts Structure

After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.

Read More →