Car dealer network stable, per store sales may break record

Aug 16, 2012

Urban Science, a global retail consulting firm, released 2012 midyear statistics and insights from its automotive Franchise Activity Report (FAR) that 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, or throughput, will rise this year.

This increase would be an all-time high, surpassing the previous record of 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.”

As of June 30 there were 17,770 dealerships in the United States, a small increase from January, and the nation’s dealership network is trending to achieve its second straight annual store increase after growing by 0.6% in 2011. Urban Science data shows that in the long term, the network typically experiences a 2% decline per year, making an increase, even a slight increase, significant.

“While individual states experienced minor dealer count fluctuations, 85% of markets in the United States remained stable and experienced no change since the beginning of the year,” Frith said. “We’re seeing tremendous consistency across the country and perhaps one of the most stable, profitable periods for dealerships in 20 years.”