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OEMs See Conditions Normalizing

More have moved away from agency model plans but see themselves taking more active role in customer relationships, Kerrigan Advisors poll finds.

July 30, 2024
OEMs See Conditions Normalizing

Most automakers said the agency model likely won’t make U.S. inroads in the next five years.

Credit:

Pexels/Erik McIean

2 min to read


Automakers have a largely positive outlook on the industry in the next 12 months, according to a just-completed survey of more than 110 brands.

The annual Kerrigan Advisors OEM poll found most automakers see retail profit normalizing and, not surprisingly, a more gradual electric-vehicle ramp-up to realistically match consumer demand. A significant number also expect sales to increase.

Most survey respondents, 54%, anticipate decreased dealership profits over the next 12 months, compared to 69% in last year’s poll. Those expecting flat profits increased from 24% to 41%.

A minority of brands, or 38%, see new-vehicle gross margins returning to levels experienced before the pandemic. Conversely, 62% expect them to settle at 50% to more than 150% past 2019 levels.

While nearly half, 48%, project that sales will be flat, 44% see them on the rise, and a mere 8% expect a sales slump, all despite affordability pressures on consumers. That’s at least in part because automakers expect inventories to continue their upswing, 70% of them anticipating days’ supply normalizing at 60 to 90 days, up sharply from 38% last year.

In good news for auto dealers, Kerrigan says automakers’ slower-than-expected EV sales have changed their views on the agency sales model. A majority, or 57%, said the agency model likely won’t make U.S. inroads in the next five years, compared to 34% last year. A smaller share, 18%, said they anticipate more facility requirements for dealers, down from 32% last year.

As for the customer relationship and data, the survey found most brands expect that OEMs and dealers will share it in the next five years, while 19% think the automakers will assume that exclusively, up by 16%.

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