DETROIT — The average number of sales per dealership in the United States is on track to hit an all-time record of 904 units based on vehicle sales of 16.2 million, according to a report from Urban Science. This all-time high will mark the third straight year the U.S. dealership network set a new throughput record.
The 2014 midyear Automotive Franchise Activity Report (FAR) shows a slight increase in the number of automotive dealerships in the United States since the end of 2013. As of July 2014, there were 17,903 dealerships, a 0.4% increase from last January’s total of 17,838. The number of franchises also increased slightly (0.2%) from 31,440 on Jan. 1, 2013, to 31,489 as of July 2014.
“Manufacturers and dealers continue to strike the delicate balance between meeting market demands and achieving profitability levels that have allowed the industry to rebound and thrive,” said John Frith, vice president of Urban Science. “We know that automobile sales patterns are cyclical; it’s vital to remember current sales levels are near the peak of this cycle and will drop before growing again.”
Data shows that the most significant dealership increases occurred in Florida, where there were nine dealerships added; California, with eight dealerships; and Georgia, Kentucky, Michigan and Tennessee, which added five dealerships each. While Florida added more rooftops than any other state, many resulted from franchises previously combined under a single rooftop being separated and moved to new, stand-alone locations.
“Planning for the downturn will help dealers avoid financial problems in the future,” Frith said. “As dealerships approach throughput of 1,000 units in the short term, manufacturers may be tempted to add rooftops to alleviate some of the pressure. It’s extremely important that instead, they focus their efforts on planning for long-term sustainability throughout the inevitable sales cycle.”