Cox Automotive Research: With a National Election Approaching, the U.S. Auto Industry Enters a Season of Uncertainty

New research released today by Cox Automotive, the world’s largest automotive services and technology provider, reveals that nearly 75% of automobile shoppers in the market for a vehicle expect the outcome of the U.S. presidential election in November to impact the economy.

The findings underscore a high level of uncertainty in the auto market – across both major political parties and among dealers and shoppers – caused partly by expectations that the November election will reshape the economy, change interest rates, or impact inflation. Due to the anticipation of future changes, many shoppers may be adopting a wait-and-see attitude, choosing to stay on the sidelines until a more certain economic direction is established. Additionally, 78% of respondents told Cox Automotive that they expect the November election to influence their decision-making when it comes to making a big-ticket purchase other than an automobile.

“If shoppers believe interest rates will be lower in the future, or that the economy will be improving – or worsening – post-election, they are more likely to stay on the sidelines, waiting for the dust to settle,” said Vanessa Ton, senior manager, Research and Market Intelligence, Cox Automotive. “This new research reminds us that elections breed uncertainty, and when big-ticket purchases like automobiles are on the line, uncertainty is the enemy.”

The key takeaways from the study include:

1. Nearly 3 in 4 consumers expect the upcoming U.S. presidential election to impact the economy.
2. A notable 66% of consumers and 82% of dealers feel the outcome of the election will affect interest rates.
3. Inflation is the No. 1 concern among shoppers, with 74% of consumers and 81% of dealers believing the next election will influence it.
4. According to 60% of consumers, the November election will affect their next vehicle purchase.
5. Most consumers feel the election will not impact their powertrain decisions; the majority are opposed to government mandates on electric vehicles.

The study – Automotive Shopping and a National Election: A Season of Uncertainty – was conducted in February and includes interviews with more than 500 in-market vehicle shoppers. Of the respondents, 91% were likely to vote in the coming election. Additionally, in late April and early May, 1,026 new and used automobile dealers across the U.S. were surveyed.

Auto Dealers, More than Shoppers, Expect Change

Interestingly, this research found that automobile dealers are more likely than vehicle shoppers to believe the election will impact the economy. Significantly, more dealers expect interest rates – which many believe are the top factor holding back business – will change post-election. More than shoppers, dealers expect inflation to get worse after the election.

Both shoppers and dealers expect the election to change the economic landscape – the overall economy, interest rates and inflation – but fewer believe it will impact consumer spending or vehicle sales. Still, 62% of shoppers feel the election will affect consumer spending, with 38% expecting spending to improve. Meanwhile, 53% of consumers expect vehicle sales to be impacted, but only 21% expect sales to get worse. Thirty-two percent expect improvement; 47% expect no impact.

Auto dealers are more pessimistic about consumer spending and vehicle sales: Nearly half of dealers polled expect consumer spending to worsen, and 38% expect vehicle sales to worsen. With vehicle sales, an equal number of dealers believe the election will have no impact or believe sales will improve after the election – each at (31%). Auto dealers are also far more likely to believe that the election will impact car loan interest rates and the types of vehicles automakers manufacture.

“With this research, we were surprised by the low percentage of respondents that expected ‘no change’ come November,” added Ton. “Across both party affiliations, with dealers and shoppers alike, there are expectations that changes are coming.”

Many Believe Vehicle Prices Will Change, Powertrain Consideration Won’t

The study finds that nearly 70% of shoppers believe that vehicle prices will change due to the election, with 41% expecting prices to rise. Only 26% of shoppers expect prices to fall after the November election. Thirty-three percent believe the election will have no impact on vehicle prices. A majority of shoppers (52%) expect the election outcome not to affect their decisions to buy luxury or non-luxury, and slightly more (57%) expect the election to have no impact on their decision about import or domestic brands.

Shoppers are also in general agreement (61%) that the November election will NOT impact what powertrains they will consider, and a majority of shoppers (54%) disagree with the statement, “The government should mandate consumers to purchase electric vehicles.” Only 22% of respondents to the Cox Automotive study agree with the electric vehicle mandate statement.

Auto Dealers React to Coming Election

Additional research undertaken in late April and early May, as part of the quarterly Cox Automotive Dealer Sentiment Index, found that automobile dealers in the U.S. believe that the political climate ahead of the November election is increasingly becoming a factor holding back business.

In the Q2 2024 report, when asked about factors holding back business, auto dealers remained focused on Interest Rates, the Economy, and Market Conditions, respectively, with minimal change from Q1 and one year ago. However, with the U.S. presidential election approaching, Political Climate continues to increase as a factor affecting business.

In fact, while concerns about interest rates have come down slightly quarter over quarter, concerns over the political climate have increased. In Q2, 36% of dealers in the U.S. – both franchised and independent dealers – cite Political Climate as a factor holding back business, up from 33% in Q1 and 29% one year ago.

Cox Automotive Chief Economist Jonathan Smoke commented, “In many ways, the political climate is a surrogate for ‘uncertainty.’ Many dealers and consumers believe the election outcome will impact the economy in some way – either good or bad – and that expectation of change is causing paralysis in the market and hurting sentiment.”

More than independents, franchised dealers – those that sell both new and used vehicles – feel that the political climate is holding back business. At 41%, Political Climate is now ranked No. 3 on the list of top 10 factors affecting business. Independent dealers are slightly less concerned about the political climate, as they prioritize Expenses (No. 4) and Credit Availability (No. 5). For independent dealers, Political Climate ranks No. 6, at 34%, up one percentage point from Q1.