Car Dealers See Renewed Vigor
DETROIT (WWJ) - Car sales may not be back to pre recession levels, but dealer profits are.
INTERVIEW: Urban Science VP John Frith talks with WWJ's Jeff Gilbert
"The first six months of the year have been very strong for automotive retailers," said John Frith, vice president, retail channel solutions, Urban Science. "Automakers have kept their networks relatively flat, giving existing dealerships the opportunity to take advantage of increased sales volume. By doing this, and in turn achieving record throughput levels, dealers are making a profit for the first time in more than three years without having to rely on their service departments to do so."
Urban Science, which consults auto dealers worldwide, released its mid-year update today. It found that the average dealer is now selling 805 vehicles per year. Dealer through-put, as that's called, has never been that high. Not even when the auto industry was selling 17 million cars and trucks per year.
For individual dealerships that means a healthier bottom line.
"Year over year, the profitability at the dealerships is up ten to fifteen percent, June to June," said Frith. "So, that's, again, very good news. So, stable dealer count, profitability up. That's really good."
Urban Science says there were 17, 770 car dealers in the United States in the first half of this year. That is three more than last year. But, Frith sees that as stability.
"The long term trend has been a two percent decline in dealerships every year. So the fact that it's up even three units is a bit different," he said. "So, that's good news for the dealers."
The closing of 187 Saab dealers was offset by new dealerships opening. The states with the most new dealers are California, Iowa and Florida.
Michigan, Ohio and George lost the most dealers.
Meanwhile, Urban Science reports that China now has more car dealers than the United States. China is now home to 19,890 automotive franchises.
China has been the world's largest car market for three years now, and continues to grow. Although the rate of that growth has slowed.
That's having an impact on China's car dealers.
"The sales network in China is at a crossroads," said Hamilton Gayden, managing director, Urban Science China. "Until this point, automotive manufacturers have been largely concerned with getting enough operators established to manage theirsales. Today, with the sales pace calming, manufacturers are rethinking their retail footprints and being much more strategic, shifting from a network built simply on relationships to – for the first time – a true network plan driven by data."
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