DETROIT — Last year, the industry experienced a slight decrease in the number of auto dealerships despite auto sales reaching 15.6 million units, according to Urban Science’s 2013 Automotive Franchise Activity Report. And despite sales expected to exceed 16 million units, the consulting firm projects the network will remain unchanged for the fourth straight year in 2014.
As of Jan. 1, 2014, there were 17,838 dealerships (rooftops), a 0.1% decrease from the 17,851 stores that operated as of Jan. 1, 2013. "Over the last five years, the dealership network has set a new normal pattern," said John Frith, vice president of Urban Science. "Maintaining this very conservative rate has allowed the U.S. network to continue its impressive increase in sales per dealer, creating a healthy and right-sized retail structure that benefits the dealers and automakers."
The dealership count has a large impact on the profitability of individual dealers because of its relationship to throughput, the average number of sales per dealership. Based on 2013 vehicle sales of 15.6 million, Urban Science's analysis shows throughput increased to an average of 874 sales per dealership, an uptick of 62 sales per dealership from last year's average of 812 and significantly higher than the recent low of 564 sales per dealership in 2009.
Urban Science estimates that if 2014 vehicle sales reach 16.15 million, as projected by LMC Automotive, average sales per dealer will shatter the current all-time high and increase to an astounding 914. However, Urban Science expects these peaks to ultimately settle into "normal" throughput levels of around 850.
Data shows that more than 96 percent of local markets had virtually no net change over 2013. However, the most significant dealership increases occurred in California, with 34 new dealerships, and Texas, with 15 new dealerships. These two states also showed the greatest increases in 2012.
As of Jan. 1, 2014, there was a total of 31,440 franchises (brands a dealership sells), a 0.5 percent decrease from 31,608 as of Jan. 1, 2013. This slight decrease can be attributed largely to the closure of 220 Suzuki franchises.
"When it comes to the number of dealerships and franchises, there's no question we're in the midst of a very comfortable balance with sales," said Frith. "We see no indication that any dramatic changes are to be expected in the near future."
Originally posted on F&I and Showroom