DETROIT -

After years of dwindling, Urban Science is reporting that franchised dealership ranks grew in 2011. The company revealed that last year saw a slight jump in the number of dealerships, climbing to 17,767 in the U.S., a 0.6 percent increase from 17,659 in 2010.

“In a ‘normal’ year, there is a 2 percent decline in the number of dealerships, making the rise quite significant,” officials stressed.

The company explained the two largest contributors to the increase in dealerships were Fiat, which added 135 dealerships in 2011, and Chrysler-Dodge-Jeep, which added 50 dealerships.

Other OEMs also added dealerships, but in smaller amounts.

“We have a stabilized, right-sized dealership network that has increased year-over-year for only the second time since we started this census,” said John Frith, vice president of  Urban Science.

“Automakers and dealers are in a good, profitable position. To maintain that momentum and keep profitability high, they will need to resist the urge to abandon the expense controls and processes instituted the past few years,” he continued.

So which states gained the most dealers?

One western state swept the board, with California gaining a significant 31 dealers.

Next in line was New Jersey, with 10 dealers.

Ohio and Florida both gained nine dealers each; Texas, eight dealers; Virginia and North Carolina, seven dealers each; and Pennsylvania, six dealers.

What Does This Mean for Sales?

In perhaps some good news for dealers, Frith noted that one of rooftops’ problems this year is going to be figuring out how to handle what he calls a “sales influx.”

Based on 2011 vehicle sales of 12.8 million, Urban Science’s analysis of throughput, the average number of sales per dealership, increased approximately 10 percent year-over-year to 719 in 2011 (up from 656 in 2010), the company explained.

Furthermore, Urban Science estimates that if vehicle sales reach the projected 13.95 million sales this year, average sales per dealer could reach an all-time high, surpassing the previous record of 784 in 2005.

Commenting on this prediction, Frith stressed, “This year, the key issue for many dealers will be figuring out how to handle a continuing sales influx.

“This will shift more focus on ensuring that dealerships are meeting the automakers’ standards for staff, space, facility upgrades, policies and procedures,” he added.

Focusing on the Web

The company also noted that it expects that the sales increase will also drive more online traffic to dealerships as a “precursor to foot traffic.”

Based on the company’s data, lead volume could increase by as much as 15 to 20 percent, with the average dealer getting 85 leads per brand per month. This is up from 75 leads per dealer per month last year.

And with this potential increase in online leads, Urban Science contends that dealers should start thinking seriously about the following elements in their online customer response: “responding quickly, quoting a price, providing alternative vehicles in a similar price range, confirming that the vehicle requested is available in a range of offerings and that the dealer offers the customer next steps – such as coming in for a test drive.”

Explaining this logic further, Jody Stidham, global practice director for Urban Science, said, “Dealers need to continue to focus on the online lead channel as an important source of sales because this growing space is here for the long term.

“We currently see as much as 30 percent of OEM retail sales originating from Internet leads. With more than 30 percent of customers submitting a request to at least two dealers, competition is increasing for dealers. As such, it will become more important for dealers to provide a quick, quality response to capture those sales,” she continued.

Wrapping up, the company also noted that though dealer numbers were up, there was a slight decrease in the number of franchises, or number of brands a dealership sells.

But they say this is no cause for worry, noting the decrease is attributed mostly to the final stages of the Mercury brand being phased out last year.
There were a total of 29,380 franchises as of Dec. 31, 2011, a 2.4 percent decline from 30,098 in 2010.

Giving a bit of background on the data, Urban Science maintains a list of current new vehicle dealership and franchise information for all car and light truck brands in the United States, the company explained.

This is compiled on a monthly basis, and 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.