Steady dealerships selling fewer cars: report

Dealership and product numbers are stable, but fewer sales are being made

Published: August 14, 2017, 10:35 PM
Updated: August 18, 2017, 4:32 AM

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Woman buying car

The number of retail auto outlets has remained stable since the beginning of the year, but they are moving fewer vehicles, according to the 2017 mid-year Automotive Franchise Activity Report (FAR).

According to the FAR, there were roughly the same number of dealerships operating in the US — 18,199 as of July 1, versus 18,170 on January 1 (a marginal increase of 0.16%) — and they were selling 32,046 brands (up 0.1% from the 32,102 in January).

"Over the last several years, the dealership network has set a new normal pattern of stability," said Mitch Phillips, Global Director of Data for Urban Science — a global retail consulting firm that helps clients improve market share and profitability through analysis of how best to allocate resources. "The data shows that 98% of local markets had virtually no net change ( /- 1 dealership).”

The data can also be analyzed to show the change at the state level, and the most recent report indicates that Texas increased the number of retail outlets by nine, Florida by seven, Pennsylvania by six, Missouri by five, and Ohio by four.

However, with the dealership count remaining stable, the only thing affecting sales volume is consumer confidence, and current data indicates that dealerships are selling fewer cars (otherwise known as dealership throughput), and that’s been falling.

"Sales throughput for dealers is defined as the number of sales divided by the dealer count," said Phillips. "With a stable dealer count, the throughput record is controlled by the sales volume. With the current range of 2017 sales forecasts being less than 2016, throughput is forecasted to fall around 25 units to 940 units."

Established in 1990, FAR is a monthly census of automobile dealership statistics, maintained by Detroit-based Urban Science. Data used in the monthly census comes from a variety of sources, including feeds from auto manufacturers, and phone and field verification. It also compiles an annual Automotive Franchise Activity Report for the previous year.