Urban Science Franchise Activity Report: U.S. Dealership Network On Pace To Shatter Throughput Record Set In 2012

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- Right-sized US network has established new dealership count, throughput equilibriums

- Other global regions see network increases

DETROIT--Feb. 14, 2013: Urban Science released statistics and insights today from its 2012 Automotive Franchise Activity Report, which shows a slight uptick in the number of dealerships in the U.S. for the second straight year, and projects the network will remain stable for a third straight year. As of Jan. 1, 2013, there were 17,851 dealerships (rooftops), a 0.5 percent increase from 17,767 as of Jan. 1, 2012.

"In the past, a 2 percent dealership annual decline was considered normal," said John Frith, vice president, retail channel solutions, Urban Science. "But barring unexpected economic changes, network growth of 0.1 to 0.2 percent will become the new benchmark for the next few years."

The dealership count has a large impact on the profitability of individual dealers because of its relationship to throughput, the average number of sales per dealership.  Based on 2012 vehicle sales of 14.5 million, Urban Science's analysis showed a 13 percent throughput increase, with an average of 812 vehicles sold per dealership, compared to 719 in 2011. Urban Science estimates that if 2013 vehicle sales reach 15 million, as projected by LMC Automotive, average sales per dealer will shatter the current all-time high and increase to 839. Urban Science expects "normal" throughput levels to settle around 830.

Data shows that at the state level, the most significant dealership increases occurred in: Texas, 25 dealerships; California, 24 dealerships; and Florida, 11 dealerships.

As of Jan. 1, 2013, there were a total of 31,608 franchises (brands a dealership sells), an 8 percent increase from 29,380 as of Jan. 1, 2012. This 8 percent net increase is due largely to the addition of 2,277 RAM franchises, offset by 187 Saab franchise closures.

"If sales stabilize around 15 million, we expect the overall dealership count to remain relatively flat," said Frith. "While there are fewer dealerships today than a decade ago, they are larger and should be able to easily manage the increased sales and throughput. We have a good balance of sales and stores, allowing for fewer incentives and increased dealership profitability -- key reasons why it's critical to maintain a right-sized network."

International Results
In Mexico, the number of automotive dealerships increased 3.9 percent to 1,839 as of Jan. 1, 2013, accounting for 30 key brands that Urban Science regularly tracks. The number of franchises in Mexico also increased 4.3 percent year-over-year to 2,018 as of Jan. 1, 2013.  Urban Science attributes the growth to new brands, including FIAT, Mazda and Suzuki, entering the market and other brands expanding their networks as a result of investments in new factories.

Throughput in Mexico has increased each year since 2010 and rose to 537 in 2012, based on sales of 987,602. Urban Science projects that throughput will rise to 570 in 2013, based on LMC Automotive's projection of 1 million new vehicle sales, which would mark the nation's highest level since 2008.

"While the market certainly isn't saturated, Mexico is becoming an increasingly mature sales region," said Jesus Tapia, managing director of Urban Science Mexico operations. "We're seeing a greater focus on customer service, growing dealer showrooms to accommodate increased throughput and a new focus on service."

Additionally, after tracking data in Mexico for almost a decade, Urban Science has confirmed the relationship between automotive sales and the country's gross domestic product.

"We have found that 1 percent GDP growth leads to 1.71 percent growth in the auto industry," said Tapia. "Automotive sales usually lead the larger economy by about six months; this indicates the strong influence the industry has on the country as a whole."

About the Automotive Franchise Activity Report
Urban Science maintains a list of current new vehicle dealership and franchise information for all car and light truck brands in the United States. Compiled on a monthly basis, the census is the most reliable source of dealership statistics. The data comes from a variety of sources, including feeds from automotive manufacturers as well as phone and field verification. Urban Science has been collecting this information since 1990 and compiles a yearly analysis every February for the previous year in its annual Automotive Franchise Activity Report.

About Urban Science:
Founded in 1977, Urban Science is a global retail consulting firm that takes a scientific approach to help companies identify where they should allocate resources in order to increase their market share and profitability in the most effective and efficient manner. With headquarters in Detroit, Urban Science serves its global clientele from offices in the United States, Spain, UK, Germany, Italy, France, Australia, China, Mexico, Russia and Japan.

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