Dealership, franchise numbers rose in 2014

Throughput tumbles at VW, Infiniti

Dealership, franchise numbers rose in 2014

Diaz: "A huge initiative"
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Volkswagen and Infiniti, in aggressive quests to gain sales and market share, added franchises last year, each raising the franchise count by 4 percent. But their U.S. sales fell, so average sales per franchise, or throughput, tumbled.

The VW brand's sales slid 7 percent, and sales per franchise dropped 10 percent. Infiniti's sales dipped 3 percent, slicing its throughput by 5 percent.

Overall U.S. new-vehicle sales rose 8 percent in 2013, while the number of new-vehicle franchises was up by less than 1 percent.

Throughput matters, says Tom Libby, an auto analyst with IHS Automotive.

"When your throughput is higher, your profits are higher, your dealers are happier," says Libby. "They're spending money on the facility and they're hiring people so your whole retail network is stronger."

Last year some brands added a few franchises and others let attrition take its course, but changes in the number of franchises generally were modest. The overall number of new-vehicle dealerships and franchises was flat, according to the exclusive annual dealership census compiled by the Automotive News Data Center.

As of Jan. 1, the number of new light-vehicle dealerships in the United States increased 0.6 percent from a year earlier to 17,875. The number of franchises edged up 0.3 percent to 31,464.

A franchise is an agreement that gives a dealer the right to sell a particular brand of new vehicles. A dealership is the building in which one or more of those vehicle brands are sold.

Detroit 3-badged
   
BrandExclusives within parent corp.Total franchises
Chevrolet1,4733,035
Cadillac143933
GMC601,748
Buick242,081
General Motors1,7007,797
Ford2,3473,118
Lincoln146917
Ford Motor Co.2,4934,035
Jeep132,275
Chrysler22,300
Dodge-2,302
Ram-2,303
Chrysler Group159,180
Total U.S.-badged4,20821,012
Year-ago total4,23921,012
Import-badged
 No. of exclusivesTotal franchises
Toyota1,0291,234
Honda9301,042
Nissan8901,061
Hyundai621825
Kia533770
Volkswagen389640
Subaru375621
Mazda334636
Acura246275
BMW229338
Mitsubishi218386
Lexus216234
Fiat214214
Mercedes-Benz209361
Infiniti171205
Volvo170305
Audi142280
Porsche85189
Mini81119
Land Rover62167
Jaguar21163
Aston Martin1236
Lotus839
Lamborghini228
Bentley245
Maserati*175
Smart-91
Ferrari*-38
Rolls-Royce-35
Total import-badged7,19010,452
Year-ago total7,01610,364
   
Total exclusives11,39831,464
Year-ago total11,25531,376
   
*Estimate
Source: Automotive News

VW and Infiniti may yet boost sales, matching rising sales to more stores. But for now, Infiniti might do well to consider its Nissan brand sibling.

Nissan trimmed its franchise count 1 percent to 1,061 last year, and sales climbed 11 percent. It boosted new-vehicle sales per franchise 11 percent to 1,064, ranking No. 4 among brands in throughput.

A decade of U.S. dealerships
Jan. 1Total light-vehicle dealershipsNumerical change from previous yearYear-to-year percent change
201417,8751151%
201317,760-98-1%
201217,8582051%
201117,653-955-5%
201018,607-1,846-9%
200920,453-1,008-5%
200821,461-300-1%
200721,761-328-2%
200622,089-111-1%
200522,200230%
    
    
Source: Automotive News and company sources

Fred Diaz, Nissan North America senior vice president for U.S. sales, marketing, parts and service, says there are some secondary markets in which the company could add dealerships. But its primary focus is having the right dealers in its primary markets and increasing the throughput and profits of its existing dealers.

"It's a huge initiative," Diaz told Automotive News. "Am I going to say at the end of the day the dealers that we have right now may not grow by 40 or 50 dealers? It may. Might it shrink by 20 or 30? It may, through normal attrition and buy-sells that take place between dealers and changes in how you draw your markets."

Hyundai and Kia, which have been among the fastest-growing brands in terms of new-vehicle sales and franchises, slowed their pace last year. Hyundai added three franchises last year, and sales rose 3 percent. Its sales per dealership grew 2 percent to 875, well below the prior year's 8 percent gain. Kia added five franchises, and its sales fell 4 percent; sales per franchise slid 5 percent to 697.

The Toyota brand, including Scion, again was the sales-per-franchise leader with a 7 percent increase to 1,590. Its sales rose 7 percent last year, and the brand added just one franchise, bringing its total to 1,234.

In addition to Toyota and Nissan, Honda and Lexus also had more than 1,000 sales per franchise.

Chrysler Group is still tinkering with its Genesis consolidation plan, which calls for each dealership to sell all four of its brands -- Chrysler, Dodge, Jeep and Ram -- under one roof. It increased its dealership count 1 percent to 2,390 and its franchise count 1 percent to 9,180.

A Chrysler Group spokesman said the consolidation is "largely complete" but "may never reach 100 percent because there is a small handful of stores out there that are one, two, or three brands," largely in rural areas.

General Motors and Ford Motor Co. continued to chip away at their dealership and franchise totals, boosting dealerships' throughput.

GM's Chevrolet, Buick, Cadillac and GMC brands, as well as the Ford brand, each trimmed their franchise counts 1 percent.

Ford Motor's Lincoln brand trimmed its count 2 percent to 917. As a result, even though Lincoln was the only Ford or GM brand with lower sales, posting a 1 percent drop in 2013, its throughput rose 5 percent to 89.

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


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