Supported by Trump, US dealers are optimistic on everything except electric vehicle sales

Alex Tovstanovsky, owner of used car dealership Prestige Motor Works, checks inventory with his general manager Ryan Caton in Naperville, Illinois, May 28, 2020.

Nick Carey | Reuters

DETROIT There is “renewed optimism” among U.S. auto dealers heading into 2025, fueled by the return of President-elect Donald Trump to the White House as well as positive trends in interest rates and incentives to sales supported by automakers, Cox Automotive reported Wednesday.

But dealers aren't feeling more optimistic about selling electric vehicles, according to Cox's fourth-quarter 2024 Dealer Confidence Index, based on extensive surveys of dealers conducted after November's U.S. presidential election.

“The outlook for electric vehicle sales in the coming months has fallen further, with the majority of dealers suggesting sales would decline in the next quarter. There are concerns that the new administration's policies will not help an already fragile business” , according to Cox.

These potential policy changes under the Trump administration could include reduced federal funding for promoting electric vehicles, such as ending current consumer credit of up to $7,500 toward the purchase of one of the vehicles, as well as less stringent fuel and emissions regulations.

“We are receiving clear feedback that the tax credits are working in both the new and used markets,” Jonathan Smoke, Cox's chief economist, said in a statement. “This is something that could change quite quickly next year, so I think the lower outlook is directly related to the at-risk status of the electric vehicle tax credits.”

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Car dealership stocks in 2024.

Cox's Market Outlook Index, which measures dealers' expectations for the auto retail market in the coming quarter, jumped to 54 in the fourth quarter from 42 in the previous quarter. The higher the number, the more confident dealers feel in their business.

Dealer responses are weighted by dealership type and sales volume to accurately reflect the national dealer population. The data is used to calculate an index in which a number above 50 indicates that more dealers view conditions as strong or positive rather than weak or negative.

“This significant increase suggests that more dealers believe the auto market will be stronger over the next three months. A year ago, the index stood at just 41, one of the highest numbers lowest point in its history,” Cox said in a statement.

Despite the positive outlook, the current market index score of 42 indicates that a majority of dealers still view the current retail automotive market as weak, Cox noted. This score is slightly better than a year ago, but still well below pre-pandemic norms and long-term averages.

“The recent resolution of political uncertainty following the presidential election has paved the way for a more optimistic outlook on future auto market conditions,” Smoke said. “Along with the potential for support measures such as tax cuts and the possibility of lower interest rates, dealers are more hopeful about the future as we approach 2025.”

After the November election, 35% of dealers surveyed said the political climate in the United States was affecting their business, a significant decline from the 44% of all dealers and the 49% of franchise dealers who said the same in previous quarter.

Stocks of publicly traded auto dealerships have performed well this year as prices for new and used vehicles remain high. Shares of AutoNation, Lithia Motors and Sonic Automotive are up between 15% and 22% for the year, while Group 1 Automotive stands out, up about 40% in 2024.

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