New report details the comeback.
Wayne Gerdes - CleanMPG
- Aug 18, 2012
This dealership in the Silicon Valley area of California locked its doors for good in late 2008. It sounds as if we may see a lot less of this going forward?
A group called Urban Science released its 2012 midyear overview from its automotive Franchise Activity Report (FAR) showing that the U.S. dealership network is now stable, healthy and poised to reach record-breaking throughput and profitability levels by the end of the year.
Because of a downsized retail network and year-end projected sales of 14.3 million, the group is projecting that the average number of sales per dealership (throughput) will rise to 805 vehicles per year. This number would be an all-time high, surpassing the previous record of 784, based on 17 million unit sales in 2005!
According to the group, Automakers have kept their networks relatively flat, giving existing dealerships the opportunity to take advantage of increased sales volume with far fewer competitor dealerships than they had to contend with in the past. 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.
As of June 30, 2012, there were 17,770 dealerships (rooftops) in the United States, a 0.02 percent increase from January 2012, and the nation's dealership network is trending to achieve its second straight annual store increase after growing by 0.6 percent in 2011.
In a prepared statement by the company, John Frith, VP and Retail Channel Solutions said:
"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. "We're seeing perhaps one of the most stable, profitable periods for dealerships in 20 years."
- The three states that added the most stores in the first six months of 2012 were California (13), Iowa (eight) and Florida (eight)
- The three states that lost the most dealerships were Michigan (10), Ohio (eight) and Georgia (eight)
- Saab eliminated 187 franchises across the nation, including 59 standalone dealerships
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 January 1, 2012.
The Automotive Franchise Activity Report’s conclusions were based on current new vehicle dealership and franchise information for all car and light truck brands in the US. The data comes from a variety of sources, including feeds from automotive manufacturers as well as phone and field verification according to the PR.