The U.S. retail networks of the Detroit 3 continued to shrink in 2005, largely by design. At the same time, the number of single-line import dealerships set a record last year.
Overall, there were 22,089 new-vehicle dealerships in the United States on Jan. 1, 2006, according to Automotive News' annual census of dealerships. That figure was down slightly from 22,200 on Jan. 1, 2005. The number of car and light-truck franchises declined from 41,631 to 40,641.
A dealership is a physical location or "rooftop" where cars and trucks are sold. A franchise is an agreement by a dealership to sell a particular vehicle line. Dealerships often carry more than one franchise.
Hyundai added 35 franchises - more than any other car company - in 2005. That growth boosted Hyundai's U.S. franchise count by 5.3 percent.
By contrast, two troubled second-tier Japanese automakers were the biggest franchise losers last year. Isuzu dropped 55 franchises. Mitsubishi lost 30 franchises.
Collectively, General Motors, Ford Motor Co. and the Chrysler group lost 148 franchises in 2005. That figure does not include the 825 Oldsmobile selling agreements that went off the books last year as GM finished burying that line.
Not including Oldsmobile, GM lost 45 franchises and 219 dealerships in 2005. The Chrysler group lost 68 franchises and 114 dealerships. Since the late 1990s, both companies have sought to reduce and consolidate their dealer networks.
GM wants more dealerships to sell Pontiac, Buick and GMC vehicles together. In some markets, GM also applies the strategy to its Cadillac, Saab and Hummer luxury brands.
At the beginning of this year, 1,676 GM dealerships stocked Buick, Pontiac and GMC vehicles. A year earlier, it was 1,409.
Chris Wolf, GM's executive director of dealer network development, says the company expects to help achieve about 100 dealership consolidations this year. Market conditions often favor multiple-brand dealerships, he says. "For every (consolidation) that takes place, oftentimes, but not always, a rooftop goes away," Wolf told Automotive News.
Similarly, the Chrysler group seeks to boost the number of stores that sell Chrysler, Dodge and Jeep vehicles.
On Jan. 1 of this year, 1,905 of Chrysler's 3,883 dealerships sold all three brands. A year ago, the comparable totals were 1,855 of 3,997 stores. Ford Motor is not pursuing a consolidation strategy like GM's or Chrysler's. The company was down 40 dealerships and 35 franchises in 2005.
The largest Japanese automakers appear to be concentrating on boosting sales at existing dealerships rather than adding stores or franchises. Toyota Motor Sales, American Honda and Nissan North America collectively added just 19 franchises last year.
Toyota Division added three dealerships last year, for a total of 1,215. The number of Toyota stores that sell Scion vehicles rose by 46 in 2005, to 902.
By contrast, Hyundai's U.S. growth strategy includes a major expansion of its dealer network. Hyundai has set a goal of selling 1 million vehicles a year in the United States by 2010.
"We want 900 (franchises) with sales per outlet of 1,000-plus," says Ed Carmack, Hyundai's director of dealer development.
Hyundai sold 455,012 cars and trucks last year, up 8.7 percent from 2004. In the first three months of 2006, Hyundai sales rose 6.0 percent from the year-ago period.
Hyundai adds in South
Hyundai mostly added dealerships in Texas and the Southeast last year, says spokesman Chris Hosford. "Part of this is catching up, and part of it is preparing for the future," he says.
Carmack says the company has 69 dealerships in California but should have 100. He says Hyundai also is looking to add stores in the Midwest. He calls Phoenix a "good market and still growing."
The declining franchise totals at Isuzu and Mitsubishi in 2005 reflected plummeting sales and dealer dissatisfaction.
Isuzu shed 15.8 percent of its franchises last year, starting 2006 with 294. Isuzu's product line has dwindled to include a rebadged SUV and pickup from GM. Speculation has swirled that the company is preparing to withdraw from the U.S. market.
Mitsubishi lost 5.2 percent of its franchises in 2005, beginning this year with 545. The company's sales have slid to about one-third of what they were in 2002. Since 2003, Mitsubishi has had four CEOs, four marketing chiefs and five advertising directors.
You may e-mail Arlena Sawyers at [email protected]