The effect of the coronavirus pandemic on the number of dealerships in the United States remains to be seen. That’s according to Urban Science’s mid-year review of its Franchise Activity Report, which tracks the number of dealerships in the country.
Total dealership count has dipped only slightly this year to 18,161 at July 1, 2020, the latest study shows, compared to 18,195 dealerships at the end of 2019, and 18,251 on July 1, 2019. Total franchises slid to 32,031 as of July 1, 2020, compared to 32,185 at the end of 2019, and 32,296 at July 1, 2019.
“Right now the brick-and-mortar stores are pretty much stable,” said Mitch Phillips, Urban Science’s global data director. However, the number of dealerships tends to be a lagging indicator after a significant drop in new-vehicle sales, he added.
U.S. sales of new cars and light trucks skidded 33 percent to 2.97 million in the second quarter, as Americans hunkered down and many showrooms were shuttered by state government orders. In the first six months, U.S. deliveries dropped 24 percent to 6.48 million.
One metric that could point to a larger drop in stores in the near future is dealer throughput. Dealer throughput is measured as new, light vehicle sales divided by the number of dealerships in the U.S. With a forecast of roughly 13.3 million to 13.5 million light-vehicle deliveries this year, Urban Science has forecast dealer throughput to be roughly 734 units for 2020, down from 940 in 2019, and its lowest level since it stood at 719 in 2011.
The last significant downturn in dealer throughput was during the Great Recession, when it fell from 771 in 2007 to 660 in 2008 and then bottomed out at 564 in 2009. It increased over the next decade and has somewhat plateaued in recent years — until this year. Phillips notes, however, that throughput is affected by the number of stores. So if there are fewer dealerships, throughout may not drop as significantly as total sales.
The number of total U.S. dealerships did not see significant declines until they fell from 20,084 in 2008 to 18,481 in 2009, and to 17,659 in 2010, before edging up slightly to 17,767 in 2011, and then remained stable for the rest of the last decade.