U.S. retail auto industry adds 66 new car dealerships

U.S. retail auto industry adds 66 new car dealerships

Urban Science has released its mid-year Automotive Franchise Activity Report (FAR), and it shows that the franchise dealership network in 2011 grew for the first time in 10 years.The report also showed an increase in throughput and sales, indicating franchised dealers are in financially stronger positions than they were at the close of 2010.

At the beginning of July 2011, there were 17,725 new vehicle dealerships, an increase of 66 over year-end 2010. However, the number of franchises has decreased by 729 as of July 1, 2011, bringing that total to 29,360. The decline is due largely to the wind-down of the Mercury brand at Lincoln dealerships. Urban Science says the drop in franchises represents a major stabilization of the automobile industry, following the wind-down of 4,897 franchises in the 2009–2010 calendar years.

“The small but unusual bump in the number of dealerships can be attributed to market corrections as the automakers rearrange stores following a couple tumultuous years of network consolidation and dealership bankruptcies,” said John Frith, vice president of retail channel solutions at Urban Science. “The good news is that as auto sales have increased, dealer throughput has increased by just under 8 percent, putting dealers in a better financial position to handle the current economic uncertainty.”

Throughput at dealerships has risen to an average of 711 per dealership, an increase from 656 vehicle sales per dealership in December 2010. Average throughput is based on sales of 12.6 million units.

“The mid-year numbers illustrate a healthy, stabilized dealership network,” added Frith. “We expect a return to the long-term trend of a slow decline in the size of the network as the dealerships themselves become bigger with more franchises under one roof. We’re not expecting to see any more big closures. Dealers are more efficient than ever and have learned to weather the downturns.”

Urban Science maintains a list of current new vehicle dealership and franchise information for all car and light truck brands in the United States. Compiled on a monthly basis, the census is the most reliable source of dealership statistics. The data comes from a variety of sources, including feeds from automotive manufacturers as well as phone and field verification. Urban Science has been collecting this information since 1990 and compiles an annual analysis available every February for the previous year in its annual Automotive Franchise Activity Report.