Urban Science sees stability in franchised dealership count despite COVID-19 challenges
COVID-19 is crushing a wide array of small businesses as stay-at-home orders forced closures. Some owners are even taking the drastic action to wind down the operation for good.
However, the latest information from Urban Science shows how resilient franchised dealerships have been during the pandemic as the firm released statistics and insights on Thursday from its Mid-Year 2020 Automotive Franchise Activity Report (FAR).
As of the beginning of July, Urban Science said there are 34 fewer dealerships (rooftops) in the United States, taking the count of 18,195 down to 18,161. Analysts explained this 0.2% decrease is small and still indicates continued stability overall.
Urban Science also indicated the number of franchises — or brands a dealership sells — also experienced a period of stability, slightly decreasing from 32,185 to 32,031 since the beginning of the year.
“Since 2010, the dealership network has set a new normal pattern of stability,” Urban Science global director of data Mitch Phillips said in a news release. “The data shows that 98% of local markets had virtually no net change (+/- 1 dealership).
“That said, the most significant (net) dealership decreases occurred in California and New York at seven dealerships each, and Iowa at five dealerships. Increase in net dealership count was low, but the most significant increases occurred in Florida with seven dealerships and Illinois and Washington with three dealerships each,” Phillips continued.
“An interesting observation is that Texas is now missing from the most active states because, typically, they are on that list for adding the most dealerships,” he went on to say.
Phillips wrapped up Urban Science’s latest update by mentioning another key industry metric — sales throughput for dealers — which the firm defines as the number of sales divided by the dealer count.
“With this current stable dealer count, the throughput statistic is controlled by the sales volume which is currently forecasted to decline in 2020 by around 20%,” Phillips said. “Sales throughput should fall 206 units to 734 per store based on 2020 sales forecasts.”
Urban Science pointed out a recent Harris Poll COVID-19 tracker, however, showed that pent up demand for buying a vehicle once things return to normal and businesses reopen has increased since the end of March (11%) compared to the end of May (19%).