U.S. gains more auto dealerships after two years of decline, Urban Science says

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The number of U.S. franchise dealerships ticked back up to 18,230 rooftops in 2021 after two years of declines, according to Urban Science’s annual Franchise Activity Report.

The national dealership count fell in 2019 to 18,195, the first reduction since 2013, and dropped again slightly in 2020 to 18,157, according to Urban Science. But the increase to 18,230 dealerships in 2021 still represented a smaller population than 2018’s 18,294 rooftops.

Urban Science said all the states with notable changes last year added dealerships, led by California with 28 new rooftops. The report also highlighted Texas, which grew by 12; New York (10); Florida (seven); and North Carolina and Virginia (five each).

Urban Science calculated that 85 percent of major and minor U.S. metro markets saw no net change in dealership count.

While rooftops grew, the number of franchises operating nationwide fell 1 percent in 2021 to 31,646.

“As the chip shortage resolves and additional inventory levels the playing field for consumers in purchase negotiations, a right-sized dealership network — not a reliance on short-term, pandemic-driven consumer willingness to pay more — will continue to be the underpinning of sustainable success now and in the future,” Mitch Phillips, Urban Science global data director, said in a statement Thursday.

It’s a matter of finding a franchise count which suits regular market conditions, not the outlier years, Phillips explained to Automotive News on Wednesday. The idea is that an automaker “should be designing the network for the middle.”

Overall, both the number of dealerships and the franchise count have been stable for years, based on Urban Science’s data.

Urban Science estimated average “throughput” — the number of vehicles a dealership sells to customers — rose from 807 in 2020 to 826 last year. Drawing on an LMC Automotive forecast, Urban Science predicted each dealership would sell 868 vehicles this year on average — a 5 percent gain.

Prior to the start of the COVID-19 pandemic in 2020, the average annual throughput had exceeded 900 vehicles between 2014-2019. An 868-unit year would represent a performance slightly below 2013’s throughput of 874 vehicles.

U.S. sales reached 15.06 million new vehicles in 2021, according to the Automotive News Research & Data Center. This tally was a 3.3 percent increase from the14.58 million sold in 2020 but down from the more than 17 million seen each year from 2015-19.

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