The release of the fifth Cox Automotive Australia Dealer Sentiment Index (CAADSI) reveals Australian automotive dealers have rated business conditions amongst the best yet.
The survey reports that dealers’ views of current market conditions are almost the same as they were nine months ago and their perception of the next six months has reached a new record high.
Staff turnover and recruiting are significant challenges for dealers as more than half of those surveyed have less staff due to Covid-19 and more than nine out of 10 dealers find it “very challenging” to recruit staff, with service departments the most impacted by the current skills shortage.
Key takeaways
• Dealers responding to the survey rated their sentiment to the current market as extremely high, with an indexed score of 75 (compared to 76 in Q3 2021).
• Future projections (6 months from now) reached an all-time high this wave with an indexed score of 68 (slightly higher than Q3 2021 at 66).
• Profits remain strong with an indexed score of 69 but declined significantly after reaching an all-time high last wave (86 in Q3 2021).
• Customer traffic, and new and used vehicle sales environment also experienced some slight declines compared to Q3 2021 but remain above the threshold of 50.
• New and used vehicle inventory levels continue to be well below the threshold of 50 but improved slightly since Q3 2021. 57% of dealers feel it will be more than a year from now before vehicle inventory levels improve.
• Staffing levels declined significantly this wave. Over half of dealers cite they have less staff now at their dealership due to the impact of COVID-19.
• Limited inventory available for sale continues to be the top concern for dealers with 83% citing it as a factor holding back their business.
• Staff turnover and OEM mandates/restrictions are secondary issues for dealers this wave.
The survey, conducted by Cox Automotive in conjunction with the Australian Automotive Dealer Association (AADA), seeks to understand dealer perceptions of the current retail automotive market and sales expectations for the next six months as “strong”, “average” or “weak”.
It also asks dealers to rate business conditions with a focus on new and used-car sales as well as parts and service. It looks at a variety of key drivers including consumer traffic, inventory levels and price pressures. Responses are used to calculate an index where any number more than 50 indicates that more dealers view conditions as strong rather than weak.
“Dealers are optimistic about business conditions and remain bullish about future trading conditions, but severe staff shortages are a major concern,” AADA chief executive officer James Voortman says.
“Limited inventory remains a concern for many automotive dealers and almost 60% of respondents believe it will be more than a year before the situation improves.
“This combination of limited stock and associated longer wait times, and staff shortages make for a very challenging operating environment for the automotive retail sector,” Voortman says.
“In many of the major survey categories, the indexed results were not dissimilar to the previous results in Q3 2021, demonstrating Australian dealers’ ability to adapt to changing conditions to meet the needs of their customers,” Cox Automotive Australia chief customer officer Kirzsten Pountney says.
“Surveyed dealers report strong conditions and dealership traffic for new and used sales and they believe these conditions will continue for at least the next six months, however they also indicate that the restricted availability of both new and used vehicles is the biggest factor holding back their business and they’re not expecting vehicle availability to improve for over 12 months,” Poun
Factors holding back business
The survey asks dealers to rate the top factors holding back their businesses over the last six months. With dealers stating customer wait on average 153 days for their vehicle, it’s not surprising they again rated inventory availability as the top factor holding their business back, followed by staff turnover and OEM mandates and restrictions.
Last year business impacts from Covid-19, and availability of credit for customers were among the top three factors holding back dealerships. In this wave those factors have dropped to fourth and sixth, respectively, with staff turnover becoming the second biggest factor, after vehicle availability, holding back business for dealerships.
Data for the CAADSI research is gathered via an online survey of privately owned and publicly listed franchise auto dealers. Data is used to calculate an index wherein a number more than 50 indicates more dealers view conditions as strong or positive rather than weak or negative.
The Q2 2022 results were based on 54 dealer respondents across the country, representing almost 300 rooftops.
