The number of U.S. auto dealerships will remain the same for the next five to 10 years, according to an updated study released during the NADA Show.
That's welcome news after an earlier version of the study, three years ago, concluded that the number would decline by nearly 10 percent to 16,500 stores by 2025.
According to "The Dealership of Tomorrow 2.0: America's Car Dealers Prepare for Change," the industry's 18,000 dealerships will remain steady through the late 2020s, despite threats to retailing such as autonomous vehicles and electric cars.
The new study found that those threats are less worrisome than they appeared in the first study, the "Dealership of Tomorrow: 2025" report that was released in January 2017.
Both projects were commissioned by NADA.
Glenn Mercer, author of both studies, said he found more reason to be optimistic about dealerships' futures and advises dealers not to panic about the many changes that are coming.
"But be prepared for a flat and possibly declining sales environment in a downturn, and really rethink your cost basis and operational readiness," Mercer advised dealers in an interview with Automotive News on Sunday.
Mercer found that store numbers are not declining as originally forecast because automakers don't want to cut dealerships and new brands are emerging. However, he noted that the number of dealership owners has been declining — from about 10,000 owners prior to the Great Recession to about 7,700 today.
The new study predicts that the number of owners could fall to 6,250 by the end of this decade.
Mercer warned that dealerships still need to keep an eye on four areas of change in personal transportation: autonomous vehicles, electric vehicles, connected cars and ride-hailing. Only a few years ago, the rise of those concepts represented a doomsday scenario for some auto retailers. But that anxiety has cooled in the past few years, Mercer said.
A more immediate threat may be the industry's plateau in new-vehicle sales. Mercer advised that dealers shift their strategy from volume to profitability, streamline vendors and find a way to boost the number of vehicle sales by salesperson — a figure that has stayed at about 10 sales a month since 1985.
"We have to crack the code on this one," Mercer said. "We just can't really afford to just say that's the way it is."
