By on February 21, 2020

The annual Automotive Franchise Activity Report asserts that the number of new-car dealerships in the United States has shrunk for the first time since 2013. The difference is marginal when viewed from a national perspective, but could support prior theories that larger dealer networks are consolidating while smaller, less competitive shops are being forced out of the market. The report claims the total number of storefronts fell from 18,294 in 2018 to 18,195 at the start of 2020. Dealership throughput was similarly down, decreasing by eight units from 2018 to 940.

While not particularly alarming, the figures do seem to mirror national population trends when placed under a microscope. The states that lost the highest number of showrooms  tended to be regions that had the most trouble preventing people from moving. 

Citing additional reporting from research firm Urban Science, Automotive News said California posted the most significant dealer decrease for 2019. Census data from the Golden State estimates it lost about 190,000 residents to neighboring states in 2018. Illinois, which also lost more dealers than the national average, has seen negative population growth for about five years (and was the only Midwestern state that failed to grow in 2019).

From Automotive News:

California posted the biggest decrease in dealerships in 2019, down 28 to 1,478, followed by Illinois with nine fewer, and Ohio and Missouri with seven fewer each.

Texas saw the most growth, with 11 new dealerships in 2019, followed by North Carolina with four, and Pennsylvania and Tennessee with three new dealerships each.

The report found that 96 percent of the U.S. dealership networks showed virtually no net change.

“California used to be always most actively adding dealers,” Mitchell Phillips, global director of data at Urban Science, told Automotive News. “This is a big state and they lost a lot of dealerships.”

The state also had the largest decline in sales of any state in 2019, Phillips said, with a decrease of 6 percent.

Urban Science said there appears to be no obvious trends relating to specific manufacturers and estimates industry throughput will decline by another 14 units in 2020. Phillips added that it was worth keeping an eye on California, as it will probably either foreshadow national trends or serve as cautionary tale of what not to do.

[Image: Barbara Kalbfleisch/Shutterstock]

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33 Comments on “Report: U.S. Dealerships Shrinking in Number, Throughput Down for 2019...”

  • avatar

    That Jaguar of Novi dealer sure looks forlorn – it must have cost a bundle to build, and now it’s been sitting for years. Just sad really. Probably will be torn down for some fast-casual dinning. Makes me wonder about the big Harley dealer up the road too – how many can they possibly sell to justify such a large space (former Sam’s Club I think).

    • 0 avatar

      The US dealerships shrinking in number are because of mergers and acquisitions within the auto retail business. In Albuquerque, NM, Larry H. Miller dealerships recently added Marks’s Casa Chevrolet and Mark’s Casa Chrysler Jeep to their lineup of dealerships and outlets.

      These M&A’s always result in higher prices to the customers. It did when my brothers sold their dealerships to a national chain.

      Bottom line is that the buyers always get screwed, without even being kissed.

    • 0 avatar

      >>That Jaguar of Novi dealer sure looks forlorn<<

      lol, I was just thinking "that looks like the store at Haggerty and 10 Mile."

  • avatar

    I used to live a few miles from that Jaguar dealership, didn’t know it closed, though at least one other in the immediate area (used to be a Hummer dealership) closed, too.

    While i guess it’s not great for jobs, the auto industry, or the economy in general, i can’t say I’m too sad about a few less dealerships in existence.

    • 0 avatar

      I would be sad if fewer dealerships result in less competition and higher prices to the buyers.

      • 0 avatar

        We are nowhere close to that, and plenty of dealers are willing to deal and sell online, effectively increasing the number of dealers available to individual customers.

      • 0 avatar

        Well i did say I’m sure it’s not great for jobs, industry, or economy. I’m just stating my personal opinion about dealerships in general. I know they’re are some good ones out there, I’ve been to some. But there are a ton of stinkers,too.

        Also, with the rise of online retailers and the ability to shop physical locations over the internet, i think there’s enough slack being picked up to keep up with some dealership shrinkage for a bit.

        • 0 avatar

          Maybe there are some good ones out there, but maybe that does not apply equally across the board (in the US.)

          My best friend is still shopping for a new 2020 truck and his experience (to which I am a witness) is that online shopping isn’t all that it is cracked up to be either.

          He gets “today’s price” on a truck he and his wife like, but when he gets to the dealership and inspects the vehicle there is something that doesn’t make it a good deal, like hail damage, dents, nicks, scratches, demo-miles, whatever.

          What I want communicate is that fewer dealers competing can stimulate the remaining dealers to play hard and fast with the etiquette of salesmanship, especially online, like putting lipstick on a pig.

          My personal experience has been based on dealing with large dealerships that have both selection AND sales volume.

          My professional experience as applied to the dealerships my brothers owned was to have a variety of colors where possible, in the most popular trim/options levels, to give the broadest range of transaction price (as in there is a price for everyone.)

          I am certain that there are personal anecdotes out there about how great shopping online is but I caution “Caveat Emptor” because fewer dealers means less competition, and more shenanigans.

          The victim is always the buyer.

          Just be wary. When my brothers sold their dealerships to a nationwide retailer, their competition was ecstatic with glee at the prospect of less competition UNTIL they found out who moved into the neighborhood as truckload after truckload of new floorplan stock arrived.

          • 0 avatar
            Art Vandelay

            I don’t know…when I was shopping for the Fiesta I had a local dealership try to play games. I wasn’t even haggling, just printed out the price from Ford’s website (the page that said take this to your dealership) and went in for that price. They said I didn’t get the rebates on an ST. Ford website said I did. Went to the car, called a dealership in Tennessee (next closest dealer who had one in stock per the web site) and they said yes, come on up…we will have it detailed when you get here and paperwork ready. Confronted original dealer and they basically said I was a liar and trying to play them and that I was welcome to go to Tennessee and get it. As I have a truck I went to U-Haul, got a trailer, and did just that as the rebates were like 5k.

            I think on new cars it is easier than used ones. Not really much difference between new models at different dealerships. They can play some games with used cars based on condition though. Another reason I typically buy new.

            I continue to be amazed at the number of dealerships that still think it is 1982 and the internet isn’t a thing. I assume those are the ones shutting down, or I hope anyway. The Lou Glutz Wagon Queen type places need to go!

          • 0 avatar

            Art, that really is a great story, a make-ya-feel-good carbuying story with a happy ending. Wish there were more of them. Too many dealers still think they can pull the wool over the buyers’ eyes.

            When I buy my next vehicle(s) I’ll go back to the same dealer here in El Paso, TX. Started buying from them in July 2008 (my wife’s Highlander), came back and bought a 2011 Tundra, then my wife’s 2016 Sequoia her dad bought for the business/her, then my 2016 Tundra.

            Always a fair deal, no wishy-washy schitparade. I ask what they need to sell the vehicle for, I either accept, or decline. So far, I have accepted every price they gave me. They make money, I save money, happy campers all around.

            Other people (from church and elsewhere) I talked to have not had such excellent buying/ownership experiences.

          • 0 avatar
            Art Vandelay

            Dick Poe? I don’t know…I just always remember their commercials from when I visit Bliss/WSMR.

            I just don’t see how, with all of the info on pricing available today people still get hosed so often. The fact that it happens though explains why dealerships are still doing it, but it all blows my mind.

          • 0 avatar

            “I just don’t see how, with all of the info on pricing available today people still get hosed so often.”

            From what I was able to surmise from the tactics used at my brothers’ dealerships, especially in California, the hosing resulted from achieving the balance between wants and needs that allowed the deal to be made in the buyer’s mind.

            For example, people wouldn’t be at the dealership if they didn’t need or want to buy. And within minutes a salesperson should be able to determine whether the potential buyer is a serious shopper or just another time-wasting lookie-loo.

            Keep in mind that each and every dealership has fixed costs that they must recoup through sales in order to keep the lights on and the doors open.

            And there often is a wide difference of overhead and fixed costs between dealerships.

            For my brothers’ dealerships the CA dealerships had the least overhead and the greatest volume of sales, the Scottsdale dealership the most overhead by far with the lowest sales volume, and the Houston and Huntsville dealerships roughly the same within that wide range on both overhead and sales volume.

            So their CA dealerships had the greatest selection and sales volume, Scottsdale the least. Houston and Huntsville thrived with active dealerswap agreements with other dealers in the area, utilizing an F350 with a flatbed to swap vehicles between competing dealerships in order to make a sale.

            And then there is the customary sales commission, tt&l running-around costs to the DMV, floorplan financing costs, added dealer-installed options, etc. That can all launch the sales-transaction cost into orbit.

            The day of the month you choose to shop can also greatly affect what a dealership needs to sell a vehicle for when a buyer waltzes into the showroom.

            Now retired, do my brothers miss any of that sales drama?

            Hell no!

    • 0 avatar

      they just combined the Jaguar dealer with the Land Rover dealer a mile east on Grand River. Suburban CJDR moved years ago off of that spot over to where M-5 and Grand River meet.

      If the Infiniti dealer moves or closes, I’d expect those lots to just be redeveloped. Tom Holzer basically bought the SE corner of Haggerty and Grand River. The Hummer dealer now sells Cadillacs.

      • 0 avatar

        A gentleman working at Holzer when i lived out that way is the reason my wife bought a Jeep. We went in there one evening intending to buy an escape. We got some old guy stuck in decades past telling us about some “Jap” that was just in there who was going to buy whatever he sold him. We rolled our eyes and then he proceeded to try treating us the same. We walked out and the next day my wife called me on lunch saying to meet her at the Jeep dealership across the street because she had her new vehicle picked out.

        Re: the Hummer dealership. I forgot that kept going as a Cadillac shop. I remember seeing all those gawdy Hummers on display and wondering what they were going to become or when they’d close. Turns out they got “blessed” with Cadillacs. I’m sure they do decent business in the area, though.

  • avatar

    We got a new Jeep dealer in the last year. It’s fully stocked, but it is also a overflow lot for a Sacramento dealer.

  • avatar

    People cross shop online between dealerships, we don’t need too many more dealerships these days when each can cover a larger area with online sales.

    • 0 avatar

      But do the people that cross shop between dealerships know that many of these dealerships have agreements with each other to “swap” or “trade” stock and the buyer will be paying transaction commissions to two different dealerships?

  • avatar

    In SF Bay area where I live after 2008 Ford shut down half of of Ford and Lincoln/Mercury dealerships. It actually makes all Lincoln dealerships, Most of them stuck in 1960s or were crowded and not attractive. One in Dublin was huge but now it is Toyota dealership, huge one.

    “California, as … cautionary tale of what not to do.”

    Cannot agree more. California is a cautionary tale how to turn beautiful state into 3rd world sh…hole. People leave mostly to Texas unfortunately.

  • avatar

    Besides empty malls, empty car dealers are another good place for the homeless to set up camp. Lots of space, bathrooms, bada bing, bada boom.

  • avatar

    There has been some attrition of Alfa dealers around Motown. Two gone in the last month or so.

    Suburban in AA dropped Alfa and moved Fiat into their Jackson Rd Mopar store, which is allowed under the revised Fiat dealer rules of 2017. Their former Alfa/Fiat showroom on Stadium is for sale.

    The Giulia that C&D had so much trouble with was sold at a Mopar store in Saline, just south of AA. So, with Suburban dropping the brand, the Giulia’s new owner will probably have to tow the thing to Burmingham, the next nearest dealer.

    Yark in Toledo has also dropped Alfa, and moved Fiat into it’s Mopar store across the street. The former Alfa/Fiat store will become a Mazda store. Yark says it will shuttle in-warranty Alfas to Burmingham, but will work on out of warranty cars itself.

    The funny thing is, FCA sold twice as many Alfas last year as Fiats, and the GM on an Alfa must be a lot larger, but both of these dealers are keeping Fiat and dropping Alfa, in spite of the 500 being dropped, which accounted for about a third of Fiat sales.

  • avatar

    Might be obvious to many, but dealership “throughput” of 940 = average annual number of vehicles sold per per dealer (between 2-3 per day).

    Keep in mind that some dealers do *significantly* better than the average (Tesla’s throughput is more than 4X the average?), so a great many dealers (picture Lincoln dealers in small markets for example) are *way* below the average. Lincoln’s overall average is around 133, or one vehicle every ~3 days.

    [Urban Science – the proud professionals paid to run Hyundai’s “test drive” scam (many dealers ‘neglect’ to approve the paperwork, and it becomes the customer’s responsibility to follow-up). Lots of ill will regarding this program – look around online.]

  • avatar
    Jeff S

    I wouldn’t be surprised to see another round of dealership closures forced by the manufacturers especially if GM and/or Ford go thru a bankruptcy or bailout. If the market for pickups softens this will hurt the Big 2 1/2.

    • 0 avatar
      87 Morgan

      GM is in pretty good shape financially, not sure where or why you think they are BK prone anytime soon. Could be that it is fun to assume that GM is always almost broke.

      The closest to Bk in the near future IMHO is Infiniti; Nissan needs to get their cash bleed under control and nixing Infiniti would be a quick place to start.

      • 0 avatar

        “GM is in pretty good shape financially, not sure where or why you think they are BK prone anytime soon.”

        a short memory combined with confusing reality with what they wish things were.

        • 0 avatar

          “a short memory combined with confusing reality with what they wish things were.”

          I do not get what US citizens gain from GM, Ford or Boeing going going out of business? Where those death wishes come from? Think positively, death wishes never end well.

      • 0 avatar

        GM is betting the company’s future on plug in electrics and autononomous driving. The first is a niche market and the second is an even smaller niche market. Most of the American market is better served with ICE’s, with only densely packed urban areas suitable for electrics.

        The problem there is that many of those places – Boston, NYC, San Francisco – have no parking, forcing people to use mass transit. For most areas without such density, at least 10,000/Sq.Mi., the internal combustion engine is a better choice.

  • avatar
    Jeff S

    GM is betting the farm on EVs and self-driving with their bread and butter vehicles pickup trucks losing market share. GM presently has plenty of cash but they have lackluster products and they are grossly mismanaged.

  • avatar

    Everybody is forgetting the Great Car Bailout, during the Great Recession. When Ford went to a dollar a share. GM stopped trading and issued new stock.

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