Chrysler, VW sales per store soar

Most brands keep franchise count steady

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The Chrysler and Volkswagen brands increased sales and raised their average sales per franchise last year by about a third, even as they added franchises.

Those percentage increases in sales per store -- 36 percent for Chrysler and 32 percent for VW -- were the largest among mainstream brands last year and were far ahead of the 15 percent average industry increase.

Sales per franchise matter because higher sales mean higher profits and a healthier overall industry. Most, though not all, brands are raising sales per franchise by holding the number of franchises steady.

In 2012, the industrywide number of franchises was essentially unchanged, dropping by just 69, or less than half a percentage point, to 31,376, according to Automotive News' annual dealership census.

Meanwhile, U.S. new-vehicle sales rose 13 percent to 14,492,398 units, lifting the average number of sales per franchise by 60 units, to 465.

John Frith, a vice president at Urban Science, a retail consulting company in Detroit, said that although there are fewer dealerships than there were a decade ago, the current balance of sales and dealerships is good. Dealerships, in general, are larger and easily can handle the increase in sales, he said.

But because profits are tied to throughput, he cautioned that auto companies must be careful not to add or drop too many dealerships.

The Chrysler brand added 55 franchises last year and sold 39 percent more new cars and light trucks. Though the brand's throughput of 137 units per franchise is still far short of the industry average, Chrysler climbed closer to that average, raising per-franchise sales by 36 units, or 36 percent, from the previous year.

The rise in Chrysler brand franchises comes as Chrysler Group has pushed all of its dealers to sell all of its brands. Currently, 91 percent of dealerships that sell Chrysler brand vehicles also sell the Dodge, Jeep, and Ram brands, a spokesman said.

The Volkswagen brand, which added 20 franchises last year, sold 722 units per outlet last year, an increase of 32 percent, and the brand boosted its U.S. sales 35 percent.

Don't overdealer

Frank Trivieri, executive vice president of sales, said Volkswagen of America keeps close tabs on the number of franchises and dealerships in its markets.

"We do not want to overdealer our network," said Trivieri who was in El Paso, Texas, last week celebrating the 40th anniversary of one VW dealership and the grand opening of another. "We know how important it is for dealers to make a return on investment."

Trivieri said the company plans to add about the same number of franchises in 2013 as it did in 2012. He noted that more new VW dealers enter the network through buy-sells than through new franchises.

The Toyota brand, including Scion, again was the leader in sales per franchise: 1,491 units, up 28 percent. U.S. sales rose 26 percent in 2012. Its franchise count was unchanged last year at 1,233.

Toyota's industry-topping record for sales per franchise was 1,869 in 2007.

Japanese brands collectively sold an average 941 new vehicles per franchise last year, the highest of any regional group. Their 25 percent increase in sales per franchise in 2012 came a year after new-vehicle production and sales were cut as a result of the March 2011 earthquake in Japan.

By comparison, the Detroit 3's average sales per franchise were 309, up 7 percent, European brands' average sales per franchise were 472, up 27 percent; and Korean brands' average sales per franchise were 798, up 10 percent.

Of the 39 brands examined, 35 had higher vehicle sales per franchise last year, with 25 posting double-digit percentage gains.

Infiniti's big plans

Among those 25 was Infiniti. It increased its sales per franchise 19 percent, to 608, and added only one franchise.

There are more vehicles, more sales and more dealerships in the brand's future, Johan de Nysschen, president of Infiniti Global Ltd., told the Automotive News World Congress in January.

Over the next four years, Infiniti will add at least four vehicles to its U.S. lineup, along with new engines and transmissions, while renewing all current vehicles, he said.

Though de Nysschen gave no timetable, he said expanding Infiniti's retail network is part of the company's plan to transform itself into a global luxury brand and "significantly" increase its volume by 2020. Infiniti's 2012 U.S. sales rose 22 percent.

"We want to grow with our dealer partners," de Nysschen told Automotive News after his speech. "The expansion in volume is aimed at increasing throughput per store and improving profitability. It's really going to be demographic shifts and increasing market share that will dictate the rate of expansion of our network."

Sales per franchise fell at only a handful of brands: Aston Martin, Mitsubishi, Jaguar and Cadillac.

Cadillac's sales per franchise slid by 1 percent, by two units, to 159. The General Motors luxury brand also shed nine franchises, or 1 percent of its total. Its 2012 U.S. sales dropped 2 percent.

You can reach Arlena Sawyers at asawyers@crain.com.

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