Car Dealers Set New Record In 2012

DETROIT (WWJ) - The state of America's car dealers is good.

"It's good news," said John Frith, a vice president at the dealer consulting firm Urban Science. "Sales are up. Throughput is up. Profits are up."

Throughput is the industry term for sales per dealer. It averaged 812 last year, a record. Frist expects the number of vehicles sold per dealer to average 839 this year, and remain stable at this level going forward.

Interview: Jeff Gilbert talks with Urban Science VP John Frith.

More sales generally lead to higher profits.

"Profits didn't increase as fast as sales," said Frith. "But they are still positive. Profits are doing well at the dealership."

The overall number of car and truck franchises rose by about a half percent last month.
"The bulk of that is Ram franchises added," said Frith. That was offset by the loss of Saab and Suzuki franchises.

Georgia and Michigan lost the most franchises. Texas gained the most. But the numbers were fairly small, indicating a lot of stability, says Frist.

Frith says dealers have found ways to cut costs and help their own bottom lines.
"There's hundreds of things that they've done. It's an individual dealer-by-dealer business."

But, as times get better, the biggest risk is complacency.

"It's lessons learned during the downturn," said Frith. "They need to remember those and keep the policies and procedures that they developed to survive, to keep those in place, and keep their eye on the ball."