Dealership Reductions Set Record

Charleston, SC, with a 16.3% drop saw the greatest decline in car dealerships among U.S. cities during last year’s historic widespread reduction of automotive retail outlets, according to Urban Science.

The industry consulting firm says 2009 set a record for most dealership closings in one year. The nationwide count went from 20,446 to 18,841, an 8% drop. Normal attrition is 1%.

The 2009 decline of 1,605 dealerships was double the 2008 record of 881. That had been the largest reduction since 1991, when Urban Science first started collecting such data.

General Motors Co. and Chrysler Group LLC, which slashed dealership numbers as part of a post-bankruptcy reorganization plan, account for 90% of the dealerships closed last year.

Following Charleston among cities with the largest net dealership declines are Stockton, CA (16.2%), Albany, NY (15.5%), Poughkeepsie, NY (15.2%), and Greensboro, NC (14%).

States with the highest percentage of declines are Alaska, Mississippi, South Carolina, Arkansas and Missouri.

Not all markets experienced declines. Some even saw an increase, however slight, Urban Science’s Franchise Activity Report says.

Urban Science’s John Frith says auto maker-dealer cooperation “critical.”

Of 932 markets surveyed, 475 either stayed flat or went up by just one store. The largest cities of that group include Thousand Oaks, CA (1), Tucson, AZ (1), El Paso, TX (1), Canton, OH (0), and Daytona Beach, FL (0).

“While auto maker bankruptcies and bad economic times drove the closures, all dealers have to deal with a market that has dropped from several years of (nearly) 17 million units in sales to somewhere around 11 million,” says John Frith, Urban Science’s vice president-retail channel solutions.

Auto makers and dealers must now reach a greater territory with fewer resources, he says. “It’s more critical than ever to work together for mutual, profitable growth.”

Frith warns consolidation alone will not increase throughput at surviving stores. Auto makers and their remaining dealers must take steps to halt customer brand defections, he says.

[email protected]