Auto Sales Per U.S. Dealership May Rise to Record in 2012

U.S. auto sales per dealership may rise to a record in 2012 as demand increases and automakers’ dealership networks stabilize, according to an industry consulting firm.

Sales per dealer increased 9.6 percent to 719 vehicles last year, dealership consultant Urban Science said today in its annual Automotive Franchise Activity Report. The figure may rise about 9.2 percent to 785 vehicle sales per dealer this year, surpassing the record of 784 vehicles in 2005, the Detroit-based firm said in an e-mailed statement.

The number of U.S. auto dealerships rose 0.6 percent last year to 17,767, led by Chrysler Group LLC’s additions of stores selling cars from its majority owner Fiat SpA (F), according to the report. The increase in the dealer count last year, the industry’s first since 2000, followed a 4.4 percent drop in 2010 and 8 percent decline in 2009.

“You’re seeing a more healthy, more profitable dealer network,” John Frith, an Urban Science vice president, told reporters today in a briefing in Detroit. The challenge for automakers will be “to avoid reacting to the increased sales levels by adding a lot of dealers and potentially reversing some of these trends,” he said.

The number of U.S. auto dealerships usually falls about 2 percent annually, said Urban Science, which has compiled its annual report since 1990. Chrysler was the largest contributor to the industry breaking that trend in 2011, adding 135 Fiat dealerships and 50 Chrysler-Dodge-Jeep stores. Last year and 2000 are the only years that the industry increased its dealer count since Urban Science began the annual report.

GM, Chrysler

General Motors Co. (GM), the largest U.S. automaker, and Chrysler eliminated more than 2,200 dealers as part of their government-backed bankruptcy reorganizations in 2009. Ford Motor Co. (F) also has consolidated its dealer network as it shed the Mercury brand and cut the number of Lincoln stores in U.S. metropolitan markets.

U.S. automakers have shrunk their dealer networks to avoid having their dealers compete with each another in the same markets and to boost profitability of remaining outlets.

Urban Science bases its outlook for sales per dealership using the National Automobile Dealers Association’s estimate that 13.9 million vehicles will be sold industrywide in the U.S. this year. The industry averaged 16.8 million annual sales from 2000 to 2007, according to Woodcliff Lake, New Jersey-based researcher Autodata Corp.

To contact the reporter on this story: Craig Trudell in Detroit at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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