DETROIT – It is only by a fraction, but the number of auto dealerships is up so far this year, the retailing network’s first increase in a decade.
Now at 17,725, the dealership count rose 0.4% from January to July, says John Frith, vice president-retail channel solutions for Urban Science, an automotive consultancy.
“That doesn’t sound like a lot, but it shows stability in the network,” he says of the 66 additional stores.
Dealership numbers have declined 1% to 2% annually over the past 20 years but dropped rapidly in 2008 and 2009 as auto makers reduced their networks in the face of declining sales and hard times.
General Motors and Chrysler, in particular, slashed dealer ranks as part of post-bankruptcy reorganization plans.
This year’s increase is because some brands, such as Chrysler, are adding stores and Fiat, an Italian brand returning to the U.S., has opened new ones.
“We’re still seeing shifts of some brands going down; some adding,” Frith says.
If the troubled Swedish auto maker Saab goes out of business, 61 stand-alone Saab dealers in the U.S. would close up, too. “But that is yet to be seen,” he says.
Cities account for the recent growth in dealerships, with rural areas seeing a slight decline.
Urban Science sees the uptick as lasting but one or two years, Frith says. “Then, we’ll return to the 1%-2% decline rate.”
Dealers are experiencing an increase in throughput, or sales per store. That currently stands at 711 units, compared with 564 in 2009. The all-time high was 784 vehicles sold per store in 2005.
“The current increase is because sales are up and there are fewer dealers,” Frith says. “It gives them a better opportunity to make profits.”
Dealers who survived the recession and the auto makers’ consolidation efforts are in reasonably good shape now, he says, adding, “it is in the interest of auto makers to keep their dealership bodies healthy.”
