The Cox Automotive Dealer Sentiment Index survey says the franchised new car retail network is nervous about the future.
The survey of 115 dealers reveals the tightening of financial regulations since the conclusion of the banking royal commission has dampened enthusiasm among the automotive businesses.
Consumer confidence, market conditions and margin compression remain the dealer’s biggest trouble spots, while the Australian Automotive Dealer Association reports “new vehicle inventory is strong, and Dealers expect to see some improvements in the market over the next six months”.
The AADA says. “Despite the depressed outlook, it is encouraging to hear comments from dealers more recently that with the election out of the way, they are experiencing far more favourable trading conditions.”
One attributable correlation, the AADA points out, is the return to form of Australia’s housing market, particularly in Melbourne and Sydney.
“Reports coming in from the real estate market are seeing an upturn in auction clearance rates in Melbourne and Sydney, while the CBA is experiencing a surge in home loan applications, following the federal election,” the AADA adds.
The dealer survey conducted from March 19 to April 14 finds in the current market for vehicles dealers are locally operating in as worryingly ‘weak’ according to 51% of respondents. While the six-month outlooks improves slightly, 51% responded with ‘average’.
Of high concern for single-franchise dealers, perception of their local operating market decreased “significantly” compared to the Q4, 2018 survey, dropping from a score of 46 to 29.
Profits in the last six six months to the survey were alarming according to the 70% of respondents reporting ‘weak’ returns. However, the ability for dealers to obtain credit in the same period was, on the majority, fairly ‘typical’ according to 61% of respondents, although nearly a quarter (24%) would disagree with their ‘difficult’ verdict.
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