U.S. auto dealers increased profit in 2010-study

Wed Feb 16, 2011 1:48pm EST

* Ford brand has more dealers now than Chevrolet

* Average dealer vehicle sales to rise 14 pct in 2011

DETROIT Feb 16 (Reuters) - U.S. auto dealer average profit rose 50 to 60 percent last year as sales increased and the number of dealers fell, consultant Urban Science said on Wednesday.

The bankruptcy and restructuring of General Motors Co (GM.N) has left Chevrolet with fewer dealers than for Ford Motor Co's (F.N) flagship brand, which has the most in the United States for the first time in recent history, said John Frith, vice president of Urban Sciences.

"Domestic dealers have been through a lot in the last two years, facing economic challenges, consolidation, arbitration and brand elimination and are poised to experience improved profits in 2011," Frith said.

The average number of new vehicle retail sales per dealership, which rose 16 percent to an average of 656 in 2010, could rise to 745 sales per dealership in 2011, said Randy Berlin, global director of Urban Science.

The number of U.S. auto dealers fell 4.4 percent to 17,659 in 2010, the study showed.

While the U.S. domestic automakers have cut dealers in the past few years, the main import carmakers including Toyota Motor Corp (7203.T), Honda Motor Co (7267.T), Nissan Motor Corp (7201.T) and Hyundai Motor (005380.KS) have kept dealer counts fairly stable, Frith said.

Most of the major publicly traded U.S. auto dealer groups including AutoNation (AN.N), Penske Automotive Group (PAG.N), Group One Automotive (GPI.N), and Sonic Automotive (SAH.N) mainly rely on imported mainline and luxury brands.

Berlin said dealer profit is up due to higher retail sales and a cut in fixed costs during the downturn of 2008 and 2009 including personnel. That allowed increased retail sales to "go straight to the bottom line," he said.

"The dealers have to remember how difficult things in the last few years have been," Berlin said. "Fixed and variable costs will have to be kept in check because we are not back to the heyday yet."

Annual U.S. light vehicle sales averaged more than 16 million for a decade before they fell in 2009 to 10.4 million. New U.S. auto sales rose 11 percent last year and are expected to rise about 12 percent in 2011 to about 13 million vehicles.

Frith said the number of dealers selling the Ford brand fell 2 percent to 3,131 in 2010, but Ford now has more dealerships than Chevrolet's 3,084. The Chevrolet dealer count fell by 11 percent in 2010, Urban Science figures show. (Reporting by Bernie Woodall; Editing by Tim Dobbyn)

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