<< News >>
Monday, 2 March, 2009 10:08 PM
Automotive Dealerships Suffer Largest Decline on Record, Says Urban Science
PHOTO BY JASON RZUCIDLO / ©AMERICAJR.com
A Ford dealership in Livonia, Mich.
DETROIT -- Urban Science today revealed that a record number of automotive dealerships closed in the United States during 2008. The company's Franchise Activity Report, the nation's most accurate data on dealers, showed the nationwide dealership count for the year fell by 881, or 4.2 percent, to 20,084. The decline was the largest since 1991 when data was first collected, with the bulk of closures occurring in the fourth quarter.
According to John Frith, vice president at Urban Science, the decline in automotive franchises was less than brick-and-mortar dealerships, implying consolidation. "There has been a loss of franchises across all the manufacturers, but the Detroit Three have been hit the hardest, accounting for 80 percent of the loss," Frith said. "We'll see even more contraction in the next several years as the Detroit Three strategically rethink their retail counts and locations."
Proactive consolidation, a process in which an automaker closes a dealership or consolidates it with other nearby franchises, can be complex and expensive. To close down a retailer, state franchise laws and individual sales-and-service agreements must be honored. Automakers must provide compensation for dealer investments, such as new-vehicle inventory, special tools and resalable parts.
"When closing a dealer, the main focus for the automaker is to minimize the negative impact on the dealer and ensure customers can still be conveniently serviced," Frith added.
According to Randy Berlin, global practice director for Urban Science, proactive consolidation is the preferred method, but the market itself will force some dealers to shut their doors.
"The credit crunch is a two-pronged attack on dealers -- they can't get credit lines to secure new-vehicle inventory, and customers can't get credit to buy those vehicles," said Berlin. "However, most dealers will be able to weather the storm by reducing variable expenses and focusing on service and parts."
Urban Science's Franchise Activity Report, a subset of Urban Science's monthly Automotive Dealer Census, analyzes dealership data on national, state and market levels. Other findings include:
Colorado, Alaska, Hawaii, North Dakota and Montana were the
states that did not suffer declines in their dealership count.
"We will continue to see proactive dealer closures in metro markets," said Berlin. "Rural markets, however, will likely withstand consolidation efforts. When people talk about the number of Detroit Three dealerships versus import brands, the Detroit Three do have more. Actually, more than 90 percent of brands in non-metro areas are from the Detroit Three. Ford, Chrysler and GM serve the rural areas well, and don't have much competition from foreign automakers."
About the Automotive Dealer Census
Urban Science maintains a list of current new vehicle dealership and franchise information for all car and light truck brands in the United States. Compiled on a monthly basis, the census is the most reliable source of dealership statistics. The data comes from a variety of sources, including feeds from automotive manufacturers as well as phone and field verification. Urban Science has been collecting this information since 1990.
About Urban Science
Founded in 1977, Urban Science takes a scientific approach to helping companies identify where they should allocate resources to increase marketshare and profitability. With headquarters in Detroit, Urban Science serves global clientele from offices in the United States, Spain, United Kingdom, Germany, Italy, France, Australia, China, Mexico and Japan. urbanscience.com.
Source: Urban Science
PHOTO BY JASON RZUCIDLO / ©AMERICAJR.com
A Chevrolet dealership in Livonia, Mich.
Morpace Reports: Detroit Big Three Face Hurdles Winning Customers Back From Imports
FARMINGTON HILLS, Mich. -- In two consecutive Morpace Omnibus studies, only eight percent of car owners report having returned to a domestic nameplate after owning an import.
Bill Pendry, manager of Morpace's complexity management service, added that between 25 and 30 percent of those returning to a domestic vehicle to get a lower price, while a majority cited reasons including styling preference, improved domestic quality and reliability, along with vehicle size and riding comfort.
"This really puts scale on the challenge that domestic producers face," Pendry said. "Employing a competitive pricing strategy would leave any of the Detroit manufacturers competing for only a small percentage of car owners who will switch from an import to a domestic based on price." The Morpace studies were fielded in November, 2008, and January, 2009. Each study had more than 1,000 interviews with consumers selected from an Internet panel of adults aged 18 and older. The sample reflects the demographic profile of the U.S. population.
About Morpace Inc.
Morpace is a full-service survey research and consulting organization specializing in automotive, financial services, health care, retail and technology. Morpace has global expertise in providing innovative proprietary solutions to clients in four core areas: market definition and segmentation; product development and pricing; brand and image positioning; and customer satisfaction and loyalty.
Established in 1941, Morpace Inc., an ISO 9001:2000 certified organization, is one of the largest privately held marketing research firms in the United States. Headquartered in Farmington Hills, Michigan the company has offices in Irvine, California; New York City; and London, England.
Visit www.morpace.com for more information.
Source: Morpace Inc.
BACK TO THE AMERICAJR ONLINE HOMEPAGE
© 2009 AmericaJR.com. All