It's great to be a Lexus dealer these days. Last year, the luxury brand bumped mass-market Honda out of the No. 2 spot for U.S. light-vehicle sales per franchise.
Toyota-Scion remains the top brand in sales per franchise, or throughput.
The overall number of both new-vehicle dealerships and franchises rose less than 1 percent last year, an exclusive annual dealership census compiled by the Automotive News Data Center shows.
Amid that stability, most brands' per-franchise sales grew as U.S. new light-vehicle sales rose 5.9 percent last year. Throughput declined at just 11 out of 40 brands, including Volkswagen, Mini and Ford.
Dealers with high throughput make more money, which they can then reinvest in the dealership, said Tom Libby, an auto analyst with IHS Automotive. Also, relations between the factory and the dealer improve when both are "happy," he said. "It's crucial that your dealer body be profitable," Libby said. "The smart factory knows that."
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.
Toyota-Scion's throughput of 1,670 units, up 80 units, or 5 percent, led all brands in 2014. In fact, that was more than double the throughput of No. 8 Subaru, which surged 21 percent, or 141 units, to 825. Toyota-Scion's sales rose 5.1 percent, and it added two franchises last year.
But Toyota's Lexus luxury brand stood out for its throughput gains.
As of Jan. 1, Lexus had 235 franchises, up one from a year earlier. But Lexus' sales jumped 14 percent in 2014, pushing the brand's sales per franchise up 150 units, or 13 percent, to 1,325 units.
Lexus' sales have continued to grow after recovering from the 2011 tsunami in Japan, which crippled production. Lexus has high throughput and wide gross-profit margins, Libby said.
"That makes Lexus one of the most attractive brands in the industry for an investor, if not the most attractive," Libby said.
"People say it is almost like printing money."
Lexus is "satisfied" with its present franchise and dealership count, Brian Smith, Lexus vice president of marketing, wrote in an email to Automotive News. He said profitable dealers "tend to be energized and enthusiastic dealers" who better serve customers.
Luxury rivals BMW and Mercedes-Benz trailed Lexus substantially in throughput. BMW's sales per franchise in 2014 rose 10 percent to 1,002, while Mercedes' rose 5.4 percent to 979.
Cadillac shed five franchises last year but still had 928 as of Jan. 1 vs. Lexus' 235, BMW's 339 and Mercedes' 366. Cadillac's throughput fell 6.2 percent to 183, as its sales fell 6.5 percent.
"Cadillac is way overdealered," Libby said.
"They need to bring it down. But you can't do that overnight."
Honda added two franchises, but its throughput edged up 0.7 percent to 1,316 as its sales ticked up 1 percent.
Mitsubishi's throughput skyrocketed 26 percent to 204, topping the brand's 25 percent overall sales gain.
"It's part strategy," said Don Swearingen, executive vice president of Mitsubishi Motors North America in Cypress, Calif.
Mitsubishi had 373 franchises as of Jan. 1, down 13 from a year earlier. In the past, the automaker would have tried to replace each lost franchise. But now, if a dealer decides to drop the brand, Swearingen said, "we're waiting."
Mitsubishi's quarterly franchise review, he said, carefully considers the quality of the dealer, the dealership's financial data and the market when deciding whether to replace a franchise or allow a dealer in an adjacent market to absorb the business.
"Our focus is to make our existing dealers profitable," Swearingen said.
Today, based on data from about half the brand's dealers, he said, "dealer profitability is at a 12-year high."
As of Jan. 1, the number of new light-vehicle dealerships in the U.S. rose 0.7 percent from a year earlier to 18,000. Import-only dual dealerships saw the largest increase, 3.6 percent, to 757. The total number of franchises edged up 0.5 percent to 31,634.
Both General Motors and Ford Motor Co. pared their dealerships and franchises. But Fiat Chrysler's dealership and franchise counts edged up, in part because of its Genesis consolidation plan, which aims to have each dealership selling all four domestic brands -- Chrysler, Dodge, Jeep and Ram -- under one roof.
Fiat Chrysler has finished pushing Genesis, a spokesman said, now that about 92 percent of its dealerships sell all four brands. Those brands' combined sales came to 887 per franchise, behind Mercedes and just ahead of Hyundai's 878.
"If you have all four brands in one facility," Libby said, "you have your expenses limited, and you have a cost structure where the stores are able to be profitable."
Both Buick's and GMC's throughput increased. But their combined sales per franchise of 399, up 44 units, trailed Mini's 464, down 104.
Buick-GMC spokeswoman Kelly Cusinato declined to comment on throughput but wrote in an email to Automotive News: "We are focused on leveraging the existing momentum we are experiencing," such as sales gains on new products and positive third-party reviews.
"Both GM and the dealer network," she added, "need to invest in Buick and GMC to be successful."