Franchised Dealer Body Likely to Reach Record Profitability, Per-Store Sales

Not only is the body of franchised dealers in the U.S. expected to grow for the second straight year, these stores are likely to hit an all-time high for average new-vehicle sales per dealership, according to the latest Franchise Activity Report from Urban Science.
And these record sales would then bring record profitability, the study found.
Specifically, the firm is calling for average new-vehicle sales per dealership — also known as throughput — to hit 805 units for 2012, an all-time high.
The current record year was 784 sales per dealership reached in 2005, when there were 17 million units sold.
While this year’s sales expected to come in at 14.3 million units, the retail network is also smaller; hence, the higher average.
“The first six months of the year have been very strong for automotive retailers,” explained John Frith, vice president of retail channel solutions at Urban Science.
“Automakers have kept their networks relatively flat, giving existing dealerships the opportunity to take advantage of increased sales volume,” he added. “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 for the current size of the nation’s franchised dealer body, the most recent count (June 30) indicated there were 17,770 rooftops, up 0.02 percent from January. Last year, the dealer count grew 0.6 percent and 2012 is on pace to climb, as well, which would make it two straight years of growth.
“Urban Science data shows that in the long term, the network typically experiences a 2-percent decline per year, making an increase, even a slight increase, significant,” the company stated.
Through the first half of the year, California brought in the most store additions, with 13, with Florida and Iowa in a tie for second, as each added eight.
Conversely, Michigan had the highest loss in dealership count, with 10 stores gone. Georgia and Ohio each lost eight dealerships.
“While individual states experienced minor dealer count fluctuations, 85 percent of markets in the United States remained stable and experienced no change since the beginning of the year,” Frith added. “We’re seeing tremendous consistency across the country and perhaps one of the most stable, profitable periods for dealerships in 20 years.”
Sharing some other statistics from the report, the firm noted that there were 187 Saab franchises eliminated in the U.S., 59 of which were standalone stores.
Additionally, Urban Science stressed that despite the uptick in dealership numbers, there was a modest drop in the number of franchises.
“While the number of dealerships increased slightly, the number of franchises (the number of brands a dealership sells) declined slightly to 29,233, a 1-percent decrease from January 1, 2012,” it noted.