The past three years saw the fastest consolidation of U.S. car dealers in history, with the recession, bankruptcy filings and the elimination of the Mercury, Saturn, Pontiac and Hummer brands.
Now, with the economy and sales rebounding, a few brands are adding stores, and the Detroit 3 continue to winnow their dealership ranks. But no wholesale eliminations on the scale of what dealers just went through are on the horizon.
The new normal is a vastly different retail landscape. The number of light-vehicle franchises in the United States fell 16 percent last year, to 29,309 on Jan. 1, housed in 17,653 dealerships, counting both exclusive and dualed stores, according to the annual Automotive News dealership census. That's one-quarter fewer franchises than on Jan. 1, 2008.
As the dust settles, the Detroit 3 have 58 percent of all dealerships in the United States, down from 69 percent just five years ago.
Don Johnson, General Motors' vice president of U.S. sales operations, wrote in an e-mail that the company's "smaller, simpler dealer network" is the right size to satisfy its customers and "provides greater operating efficiencies and increased dealer throughput and profitability."
With fewer franchises handling more sales, the average GM franchise sold 279 new vehicles last year, up from 175 in 2009. Average sales per franchise rose at Chrysler Group to 167 from 150, and at Ford Motor Co. to 447 from 264. But that still leaves those franchises shy of the all-import average of 602 sales per franchise, up from 550 in 2009.
The retail shrinkage was overwhelmingly a Detroit 3 consolidation. In 2010 alone, the Detroit 3 brands shed 5,360 franchises, leaving 18,744 on Jan. 1. That represented a 22 percent decline from a year earlier -- and a 37 percent tumble from 29,621 on Jan. 1, 2006.
Meanwhile, the number of import-badged franchises was flat with 10,565 on Jan. 1, 2011, just 24 fewer than a year earlier.
Japan-badged franchises combined saw a net drop of 61, to 5,960, because of a drop of 82 Suzuki franchises. The Japanese decline thus offset an increase of 52 franchises for the Korean brands of Hyundai and Kia, to a combined 1,533.
Ernest Bastien, vice president of retail market development at Toyota Motor Sales U.S.A., says there's not much dealership expansion at Toyota or in the industry right now.
The company knows that its current 1,240 Toyota Division franchises, including Scion, are capable of selling 2.3 million vehicles, considerably more than the 1,534,266 it sold in 2010. Industry sales would have to grow significantly beyond 14 million, Bastien says, before the company would seriously consider adding dealerships.
"There is plenty of excess sales capacity with our existing dealer body," Bastien says. "That's not to say there won't be pockets of growth in one part of the country vs. another part of the country over time."
GM announced the demise of Pontiac, Saturn and Hummer in 2009, but those cuts came to fruition in 2010. Those three brands accounted for 2,661 of GM's 3,823 closed franchises in 2010. GM's surviving brands did not escape the chopping block, either. For example, Cadillac's franchise tally fell by 366 last year, or 28 percent, to 950.
Ford Motor Co. brands shed 1,808 franchises in 2010, as it phased out Mercury, eliminating 1,645 franchises in the process.
At Chrysler Group, stores were dropped, but the company created more franchises. It eliminated 41 dealerships and added 271 franchises as part of Project Genesis, which calls for dealerships to house all the company's brands. A spokesman said 90 percent of Chrysler's stores now hold all four brands, with the rest to do so by year end.
The increase does not reflect Chrysler's positioning Ram as a separate brand. Dodge and Ram were counted as a single franchise in the census.
In percentage terms, the industry has closed more franchises than dealerships over the past three years, but the trend for both has been the same.
In 2008, 1,008 dealerships closed. At the time, it was the biggest decline in three decades. Then 1,846 dealerships closed in 2009. In 2010, 954 closed, leaving 17,653 on Jan. 1, 2011, down 5 percent on the year and off 18 percent from Jan. 1, 2008.
Domestic dealerships slid by 1,182 last year, or 10 percent, to 10,163. Over three years, the number of Detroit 3 rooftops fell 28 percent.
Audi added seven franchises in 2010, putting it among the 14 import brands on the plus side last year.
One was awarded to John Staluppi Sr., who, with son John Jr. owns the big Staluppi Auto Group in North Palm Beach, Fla. The group opened its first German-brand store, an Audi dealership, in 2010, and a Volkswagen dealership in West Islip, N.Y., on April 1 this year. Staluppi Sr. says he hopes to open or acquire more Audi and VW stores.
Subaru added 10 franchises, to 622, last year, making it one of only four import brands to increase its franchise count by 10 or more.
Tim Colbeck, senior vice president of sales at Subaru of America Inc., says the company added stores where it was underrepresented -- such as south Florida, Texas and Arizona -- so that a steady increase of dealerships matched the company's sales growth. In 2008, when most brands nose-dived, Subaru's sales were flat. Subaru's sales then jumped 15 percent in 2009 and 22 percent in 2010.
Now Subaru wants to build sales per outlet. Subaru is "pretty close" to its ideal number of dealerships, Colbeck says: "We're not in a rush to add a lot of dealers."