Report: U.S. Dealerships Shrinking in Number, Throughput Down for 2019
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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- DenverMike When was it ever a mystery? The Fairmont maybe, but only the 4-door "Futura" trim, that was distinctively upscale. The Citation and Volare didn't have competing trims, nor was there a base stripper Maxima at the time, if ever, crank windows, vinyl seats, 2-doors, etc. So it wasn't a "massacre", not even in spirit, just different market segments. It could be that the Maxima was intended to compete with those, but everything coming from Japan at the time had to take it up a notch, if not two.Thanks to the Japanese "voluntary" trade restriction, everything had extra options, if not hard loaded. The restriction limited how many vehicles were shipped, not what they retailed at. So Japanese automakers naturally raised the "price" (or stakes) without raising MSRP. What the dealers charged (gouged) was a different story.Realistically, the Maxima was going up against entry luxury sedans (except Cimarron lol), especially Euro/German, same as the Cressida. It definitely worked in Japanese automaker's favor, not to mention inspiring Lexus, Acura and Infiniti.
- Ronnie Schreiber Hydrocarbon based fuels have become unreliable? More expensive at the moment but I haven't seen any lines gathering around gas stations lately, have you? I'm old enough to remember actual gasoline shortages in 1973 and 1979 (of course, since then there have been many recoverable oil deposits discovered around the world plus the introduction of fracking). Consumers Power is still supplying me with natural gas. I recently went camping and had no problem buying propane.Texas had grid problems last winter because they replaced fossil fueled power plants with wind and solar, which didn't work in the cold weather. That's the definition of unreliable.I'm an "all of the above" guy when it comes to energy: fossil fuels, hydro, wind (where it makes sense), nuclear (including funding for fusion research), and possibly solar.Environmental activists, it seems to me, have no interest in energy diversity. Based on what's happened in Sri Lanka and the push against agriculture in Europe and Canada, I think it's safe to say that some folks want most of us to live like medieval peasants to save the planet for their own private jets.
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- MaintenanceCosts There's no mystery anymore about how the Japanese took over the prestige spot in the US mass market (especially on the west coast) when you realize that this thing was up against the likes of the Fairmont, Citation, and Volaré. A massacre.