DETROIT — Urban Science’s 2011 Automotive Franchise Activity Report (FAR) showed that the dealership network has grown in 2011 for the first time in a decade by 0.4 percent. The report also revealed an increase in throughput and sales, indicating that dealers are in stronger financial positions than they were at the close of 2010.
At the beginning of July 2011, there were 17,725 dealerships, an increase of 66 from the end of 2010. The number of franchises has decreased, however, by 729 franchises as of July 1, 2011, bringing that total to 29,360. The drop is attributed to the wind-down of the Mercury brand at Lincoln dealerships but represents a stabilization of the industry, according to Urban Science.
“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 increased to an average of 711 per dealership, an increase from 656 vehicle sales per dealership in December 2010, according to Urban Science. Average throughput is based on sales of 12.6 million units.
“The midyear numbers illustrate a healthy, stabilized dealership network,” Frith said. “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.”