Detroit Free Press - Car dealers could have a record year in sales per dealership, said John Frith, vice president of Urban Science, which released its annual Automotive Franchise Activity Report on Tuesday.
The auto crisis of a few years ago trimmed the number of dealers, and they will only get busier with forecasts that U.S. auto sales could reach 14 million in 2012.
Average sales per dealership -- also known as throughput -- was 719 in 2011. The forecast is to hit 785 this year, Frith said, beating a throughput of 775 vehicles in 2000.
The number of dealerships in the U.S. grew by 100 last year to 17,767, including a gain of four in Michigan, further evidence of a healthier industry, according to the Detroit-based retail consulting firm.
"To put this into perspective, in a normal year we see a 2% decline in the number of dealerships nationwide, which makes an increase, even a small one, very unusual," Frith said.
He noted this is only the second time since 1990 he has seen the count increase year over year. The first increase was in 2000.
The downturn in 2008 led to bankruptcy in 2009 for General Motors and Chrysler. Their restructurings included a shrinking dealer count. GM went from 6,375 dealers in 2008 to 4,400 today. Chrysler had 2,336 and eliminated 789 but brought 43 back.
Ford shed Mercury and in 2011 reduced the number of Lincoln dealers in metro markets from 500 to 325, including the loss of three in Michigan: metro Detroit, Ann Arbor and Monroe.
But growth reigned in 2011.
The return of the Fiat brand added 135 dealers and Chrysler brands added 50.
Looking at the number of franchises in the U.S., which refers to the number of brands a dealership sells, there was a 2.4% decrease last year from 30,098 to 29,380, largely because of the loss of Mercury.
Frith said the dealers that survived are more profitable today.
Chrysler says 85% of its dealers are profitable compared with 70% in 2009; GM says more than 90% are profitable. Ford said it is in line with the rest of the field.
After cutting staff and inventory, rebuilding to handle a larger sales volume in the future must be done prudently. "It needs to be done in a controlled way," Frith said.
And dealers need to recognize the increased role the Internet is playing.
More sales leads are coming from third-party Internet sites or mobile apps, said Jody Stidham, global practice director at Urban Science.
John Humphrey, general manager of J.D. Power and Associates' global automotive division, said 81% of people start their car shopping online now, and it is critical that dealers have an Internet presence and a staff trained to convert those searches to sales.
Internet lead volume could be up 15% to 20% in 2012 and dealerships need trained staff to handle them with responses that are quick and include enough information to close the deal, Stidham said.
That includes price quotes -- 30% of dealers don't provide pricing -- as well as arranging test drives and providing information such as hours and directions to the dealership, which models are in stock and anything else that will differentiate the dealership from others that the consumer is planning to cross-shop.
"Close rates are higher when dealers do these things," Stidham said.
A survey of more than 1,000 dealers last year found most feel they could use more staff and training to realize the full potential of Internet-driven sales leads, she said.
Some automakers provide training and some dealers have their own training.
The Internet is having a fundamental impact on how dealerships do business, Jim Farley, Ford's head of global sales, marketing and service, said last week at the National Automobile Dealers Association convention.
"Even mainstream dealers are asking me what they should be doing."
