Things Are Getting Better For Car Dealers

DETROIT (WWJ) - For the first time in a decade, we're seeing growth in the number of car dealerships.

The total number of dealers in the U.S. grew by 66 in the first half of the year.  That's a .4 per cent increase.  Not large, but potentially a move in the right direction.

"The dealership body has stabilized," says John Frith, vice president of retail channel solutions at the consulting firm Urban Science.  "So, the steep decline in the dealership count that we've seen in the last couple of years has stopped."

Nearly ten per cent of the nation's car dealers went away during the "great recession" of 2009 and 2010.  Economic issues were compounded by General Motors and Chrysler terminating hundreds of franchises during their bankruptcies.

2011, Firth says, has seen more Mercury dealerships disappear.  But, that's been offset by Chrysler adding some dealerships, and new stores from Fiat.

"Four tenths is a slight increase, which is unusual," he said.  "But, the real point is that it's not a four point decline, like we saw in the last years."

The vast majority of the dealership growth came near large cities.  The number of dealerships in rural areas continues to decline.

Urban Science is a retail consulting firm, which works with auto companies and dealerships.  They track a number of statistics involving sales and dealers, and release some of that information in their periodic "Franchise Activity Report."

The report details an improving situation for car dealers.  They are selling an average 711 vehicles per dealerships this year, compared to 656 in 2010, and 564 in 2009, when sales bottomed out.

This is expected to mean more profitability for individual dealerships.  Frith says changes made by dealerships should help them improve those profits as the economy recovers, and help them deal with a double dip recession, should that occur.

"We've seen stability, which matches the upturn in sales in the industry," he said.  "So it's good for the dealers, good for the dealer body, good for the OEM's."

Connect with Jeff Gilbert
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