Healthier, more profitable franchise dealer network returning
Urban Science released its 2012 midyear statistics and insights from its automotive Franchise Activity Report (FAR) this week and it shows that the U.S. dealership network remains 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, Urban Science projects the average number of sales per dealership, 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,” said John Frith, vice president, retail channel solutions, 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.”
Urban Science noted that 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. 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,” added Frith. “We’re seeing tremendous consistency across the country and perhaps one of the most stable, profitable periods for dealerships in 20 years.”
The company reported that California (13), Iowa (eight) and Florida (eight) added the most stores in the first six months of 2012, while Michigan (10), Ohio (eight) and Georgia (eight) lost the most dealerships.
It also noted that 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.
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