DETROIT —The average number of sales per dealership is expected to rise to 877 units in 2013, extending an unprecedented three-year throughput increase to four years and further heightening dealership profitability, according to a report from Urban Science.
The prediction is based on vehicle sales of 15.6 million forecasted by LMC Automotive.
The 2013 midyear Automotive Franchise Activity Report shows a slight decline in the number of automotive dealerships in the United States since the end of 2012. As of July 1, 2013, there were 17,780 dealerships, a 0.4 percent decrease from last January’s total of 17,851. The number of franchises also decreased slightly — 0.6 percent — from 31,608 franchises on January 1, 2013, to 31,409 as of July 1, 2013.
“Automakers are keeping their retail networks stable even as sales continue to rise, creating a tremendous opportunity for dealerships to reap the benefits of the industry’s most profitable periods in two decades,” said John Frith, vice president, Urban Science. “While throughput levels are on track to crush last year’s all-time high, we believe we’re hitting the top of the curve. If we follow historical trends, throughput increases should slow in the next year or two before they start a mild decline.”
According to the report, while dealership and franchise counts decreased slightly during the first six months of the year, the majority of closures resulted from the loss of the Suzuki brand, which shut down 222 franchises, including 125 stand-alone dealerships. The rest of the network generally remained healthy and grew slightly since the beginning of the year; 97 percent of markets remained stable and experienced virtually no net fluctuations since the end of 2012.
The data also shows that at the state level, the most significant net dealership declines occurred in New Jersey (eight dealerships); Missouri and Pennsylvania (seven dealerships each); and Florida, Indiana, Maryland, New York and Washington (six dealerships each). California experienced the most significant dealership increase (20), while Texas added four dealerships and Arkansas, Louisiana, Nevada and Tennessee added two each.
Originally posted on F&I and Showroom