The U.S. dealership network is stable, healthy and poised to reach record-breaking throughput and profitability levels by the end of the year, according to the 2012 midyear automotive Franchise Activity Report (FAR) from the retail consulting firm Urban Science.
Because of a downsized retail network and year-end projected sales of 14.30 million vehicles, Urban Science projects that the average number of sales per dealership (or throughput) will rise to 805 vehicles per year. This increase would be an all-time high, surpassing the previous record of 784 based on 17 million unit sales in 2005.
“The first six months of the year have been very strong for automotive retailers,” explained John Frith, vice president of retail channel solutions at Urban Science. “Automakers have kept their networks relatively flat, giving existing dealerships the opportunity to take advantage of increased sales volume. By doing this, and in turn achieving record throughput levels, dealers are making a profit for the first time in more than three years without having to rely on their service departments to do so.”
As of June 30, 2012, there were 17,770 dealerships (rooftops) in the United States — a 0.02 percent increase from January 2012. Additionally, the nation’s dealership network is trending to achieve its second straight annual store increase after growing by 0.6 percent in 2011. Urban Science data shows that, in the long term, the network typically experiences a 2-percent decline per year, making an increase —even a slight increase — significant.
“While individual states experienced minor dealer count fluctuations, 85 percent of markets in the United States remained stable and experienced no change since the beginning of the year,” Frith said. “We’re seeing tremendous consistency across the country and perhaps one of the most stable, profitable periods for dealerships in 20 years.”
Other details from the midyear FAR include:
• The three states that added the most stores in the first six months of 2012 were California (13), Iowa (8) and Florida (8).
• The three states that lost the most dealerships were Michigan (10), Ohio (8) and Georgia (8).
• While the number of dealerships increased slightly, the number of franchises (the number of brands a dealership sells) declined slightly to 29,233 — a 1 percent decrease from Jan. 1, 2012.