Dealership Network Holds Steady Despite New-Car Sales Dip

The population of U.S. franchised dealerships remains stable, which has been pretty much the case since the recovery after the Great Recession, which many agree lasted from 2007-2009. It was almost exactly flat at year-end 2022, compared to year-end 2021, according to the annual Urban Science Franchise Activity Report.

Urban Science reports 18,257 U.S. franchised dealership rooftops at year-end 2022, up just 27 dealerships for the year, an increase of far less than 1%.

“The increase this year is the lowest I’ve seen in over 20 years,” Mitch Phillips, Urban Science global director of data, tells Wards in a phone interview.

Urban Science, based in Detroit, is a consulting, research and technology firm specializing in retail dealerships, their throughput and the territories they represent.

The flat dealership population is actually a sign of good health for the dealership network, as there was no attrition despite the fact that U.S. new-vehicle sales dipped about 8% from 2021 to 2022. Urban Science says average new-vehicle sales per dealership in 2022 was 750 units, down about 9% vs. 2021.

However, since the pandemic starting in 2020, low inventory and high consumer demand have driven transaction prices to or near-record levels.

It’s also worth noting that dealership brokers independently report unprecedented demand for dealership acquisitions, and high prices for “blue sky,” a measure of the amount the buyer pays above the value of the physical assets.

The last big drop in the dealership count began amid the credit crisis that preceded the Great Recession. The recession led to bankruptcy restructuring for General Motors and the former Chrysler Group in 2009, including dealer network cuts.

The total U.S. dealership count in 2007 was 21,327, according to Urban Science, more than 3,000 dealerships higher than today.

The dealership count bottomed out in 2010, at 17,659. It’s been back above 18,000 rooftops since 2015, with slow growth most years since then, Urban Science says.