Car Dealer Sales, Profits On The Rise

DETROIT -- (WWJ) As the major auto companies post big profits, the nation's car dealers have also seen the good times return.

An annual study of dealership sales shows "throughput"--industry language for number of sales per dealership--hitting record numbers.

"Dealers are selling more, managing their businesses well, and making profits," says John Frith, vice president at dealer consulting firm Urban Science.

The number of sales per dealer increasing from 812 in 2012 to 874 last year. That number has been growing steadily since bottoming out at 564 sales per dealership in 2009.

"Over the last five years, the dealership network has set a new normal pattern," said Frith. "Maintaining this very conservative rate has allowed the U.S. network to continue its impressive increase in sales per dealer, creating a healthy and right-sized retail structure that benefits the dealers and automakers."

With sales expected to rise from 15.6 million last year to more than 16 million this year, sales per dealer could top 900 for 2014.

This comes as the total number of dealerships remained steady last year, at 17,838. That's a .1 percent decrease, but Frith says that decreased could be explained by a number of Suzuki stores closing, as that brand exited the U.S. market. Take out the Suzuki closings, and Frith says there was actually a slight increase in the number of dealerships last year.

The states seeing the most growth in dealership numbers are two states that have also seen significant population growth, California and Texas.

Frith says all indications are that sales will remain strong for several more years, which is good news for dealerships.

"We're seeing a period of stability that looks a lot like the early 2000's."

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