THE SHOP

February '19

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4 THE SHOP FEBRUARY 2019 \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ © 2019 National Business Media, Inc. All rights reserved. THE SHOP (ISSN 2380-7415) is published monthly by National Business Media, Inc., 2800 W. Midway Blvd, Broomfield, CO 80020; (303) 469-0424; FAX (303) 469- 5730. Subscription rates in the U.S.: One year, $45; Two years $80; Three years $108. Canada: One year, $76; Two years, $142; Three years, $201 (U.S. Funds). Mexico/International: One year, $98; Two years, $186; Three years, $267 (U.S. Funds). Periodicals Postage Paid at Broomfield, CO 80020-9998 and additional mailing offices. USPS/National Business Me- dia Automatable Poly. POSTMASTER: Please send address changes to THE SHOP, PO Box 460651, Escondido, CA 92046-0651. All items submitted to THE SHOP become the sole property of THE SHOP and National Business Media, Inc. and may not be reproduced without the written consent of the publisher. Advertisers and/or their agencies, jointly and severally, assume all liability for printed advertisements in THE SHOP. Opinions expressed in THE SHOP may not necessarily reflect the opinion of the magazine's editor, its management or its advertisers. Letters, photographs and manuscripts welcome. f some or all of your business is car dealership-depen- dent, you may soon be dealing with some gloomy customers. U.S. auto dealers became more negative than positive in describing the current market in the fourth quarter of 2018, according to data from the Q4 2018 Cox Automotive Dealer Sentiment Index (CADSI). The current market index fell to 44, down from 51 in the third quarter. (A score of 49 or lower means a negative outlook; 50 or higher is positive.) Expectations for the next quarter also declined and moved into negative territory for the first time in the survey's history. The index reading came in at 49, indicating that dealers who expect conditions to be weak in the future outnumber those who think conditions will be strong. "The fourth quarter represented a notable negative turn in overall dealer sentiment and their outlook for the future," said Jonathan Smoke, Cox Automotive chief economist. "The big negative swing in expectations that was significantly lower than last quarter and the same time last year is especially alarming." The downward shift in the fourth quarter marked a negative end to a roller coaster year for dealer sentiment. Even though the U.S. auto market started off the year weak, auto dealers were optimistic in the first quarter with very high expectations of a strong spring enabled by the passage of tax reform. They got their strong market in the second quarter, but expectations cooled as higher interest rates and tighter inventory levels started to increase pressure on the industry, espe- cially for independent dealers. The market remained strong in the third quarter, but dealer optimism declined again, impacted by fear of higher prices from tariffs and the stark reality of lower inventories, Smoke summarizes. As 2018 came to a close, optimism turned to pessimism. "Slowing customer traffic, growing pressure to reduce prices and declining profitability aligned with a view of the market that retreated from strong to weak in the aggregate index," he adds. "Dealers remain worried about the negative impact of proposed tariffs leading to higher prices, but they are also now seeing a used-vehicle market that is also notably weaker than last year." The good news for aftermarket shops is that growing concerns may make local dealerships more open to new or additional upfitting options that increase profits on individual sales. Heading into 2019, THE SHOP will continue to feature articles on dealership work and areas of potential opportunity, particularly in the Restyling section where columnists Josh Poulson, Dino Perfetti, Courtney Pahlke, Jared Cohen, Jason Sakurai and others continue to offer real-world examples of ways the aftermarket can help dealerships overcome current challenges. As you prepare your dealership pitch, Smoke notes that the top five factors thought to be holding back business across all dealerships include: market conditions, credit availability for consumers, limited inventory, competition and expenses. We know for sure that aftermarket services can help move inventory and give an edge over the competition. So, get ready to provide your dealership customers a reason to smile. Can You Help Distressed Dealerships? I \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ DRIVER'S SEAT PUBLISHER REGAN DICKINSON rdickinson@nbm.com EXECUTIVE EDITOR JEF WHITE jwhite@nbm.com DIGITAL CONTENT EDITOR ANTHONY BOWE abowe@nbm.com ART DIRECTOR IVETH GOMEZ igomez@nbm.com GRAPHIC DESIGNER LINDA CRANSTON linda@nbm.com EASTERN TERRITORY SALES MANAGER WENDY MILES wmiles@nbm.com WESTERN TERRITORY SALES MANAGER RYAN WOLFE rwolfe@nbm.com SALES SUPPORT ERIN GADDIE egaddie@nbm.com TECHNICAL CONTRIBUTOR MIKE MAVRIGIAN birchwdag@frontier.com CONTRIBUTING WRITERS JOHN CAROLLO, STEFANIE GALEANO-ZALUTKO, PATRICIA KAOWTHUMRONG, ANDY MARKEN, AMANDA MCGRORY-DIXON, COURTNEY PAHLKE, DINO PERFETTI, JOSH POULSON, TONY THACKER, KEITH TURNER NATIONAL BUSINESS MEDIA PRESIDENT & CEO ROBERT H. WIEBER JR. VICE PRESIDENT/INTEGRATED MEDIA JOHN BENNETT VICE PRESIDENT/PUBLISHING DAVE POMEROY VICE PRESIDENT/FINANCE KORI GONZALES, CPA VICE PRESIDENT/NBM EVENTS SUE HUEG, CEM, CMP VICE PRESIDENT/AUDIENCE LORI FARSTAD DIRECTOR OF TECHNICAL SERVICES WOLF BUTLER MULTIMEDIA PRODUCER BRIAN HAUSER Jef White Executive Editor www.theshopmag.com

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