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There are over 21,000 new automotive dealerships throughout the U.S. That’s greater than the variety of open Starbucks espresso retailers, credit score unions, or personal hospitals. The abundance of locations to purchase passenger automobiles in such a car-centric tradition might not be terribly stunning. Nonetheless, the place these services are most concentrated could also be much less apparent.
Nationally, there are about 6.4 automotive dealerships per 100,000 residents, however that statistic varies broadly by state. To get a better look, The Normal used Bureau of Labor Statistics knowledge to map the focus of recent automotive dealerships by state, as of the top of 2023.
Automobile buyers can profit enormously from having extra dealerships near residence. The character of provide and demand implies that having a number of dealerships in the identical market can result in decrease, extra aggressive costs for these procuring there—notably when there are a number of sellers of the identical automotive model. A bigger variety of dealerships additionally creates higher selection within the automobiles patrons have to select from.
On the similar time, dealerships usually have enormous actual property footprints with showrooms and parking heaps teeming with new or used automobiles. Usually clustered collectively, auto rows of a number of dealerships can take up loads of area, which can restrict a group’s entry or proximity to different companies they might need. This impression might reduce in time as automotive manufacturers undertake smaller, extra versatile storefront designs.
Many components play into automotive dealership availability throughout the nation, such because the evolving panorama of state laws, area availability and restrictions, and automotive tradition and demand. Learn on to see how your state compares.
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Center of the nation boasts excessive concentrations of automotive dealerships
The states with the best concentrations of recent automotive dealerships aren’t those many would possibly anticipate. Vermont leads the best way, almost doubling the nationwide statistic at 12.5 sellers per 100,000 residents. Rounding out the highest six are Montana (10.9), South Dakota (10.7), New Hampshire (10.2), and Iowa and North Dakota (tied at 9.6).
Whereas the top-ranked states had been considerably unfold out, states in the course of the nation usually had increased concentrations of recent automotive dealerships than these additional east or west. States on this central area rely extra closely on driving their private automobiles as a result of they’ve much less entry to and utilization of public transit.
A number of states with extra dealerships than common have legal guidelines prohibiting automotive producers from promoting automobiles on to shoppers. Which means all automobiles should be bought via franchised dealerships, driving a necessity for extra of them. This was as soon as the first means individuals bought new automobiles, inflicting little friction.
Nonetheless, when Tesla entered the market with its direct-to-consumer gross sales mannequin, it sparked shifts available in the market and coverage. States both adopted legal guidelines to formally permit these gross sales or to forestall and restrict them within the title of defending shoppers and present dealerships. Traits towards extra on-line automobile purchases have additionally urged these debates.
Montana, South Dakota, Iowa, and different states with extremely concentrated dealerships outright ban automotive producer direct-to-consumer gross sales. Vermont restricts direct-to-consumer gross sales however does permit nonfranchised, zero-emission automobile producers (like Tesla) to make these gross sales. Many different states have comparable limitations.
Nonetheless, it’s not a cut-and-dry problem: For instance, Texas absolutely prohibits direct gross sales by producers but in addition has one of many lowest concentrations of dealerships at 5.4 per 100,000 residents. That is shocking on each fronts, contemplating Texas is thought for scorning laws and relying closely on automobiles.
A novel issue is at play in Texas. Just lately, automotive dealerships within the state have been scandalized by rampant fraud regarding paper license tags. In 2021 and 2022, its DMV suspended dozens of licensed automotive sellers suspected of illegally promoting paper tags. It then required all sellers to get fingerprinted and can quickly require them to problem metallic plates when automobiles are bought, including new hurdles for automotive sellers.
Trailing Texas and some different states, Nevada had the fewest dealerships, at 3.6 per 100,000 residents. In comparison with the remainder of the nation, states within the Southwest had a really low prevalence of automotive dealerships.
Greater entry to dealerships aids residents in sprawling areas with restricted transit choices in addition to the place electrical automobiles and EV infrastructure have but to realize a lot traction. In coastal areas, the place e-commerce is flourishing and the EV and hybrid market is already taking off, approaches to automotive gross sales are already evolving. As these market shifts progress, American automotive patrons might grow to be even much less restricted by geography when making their subsequent buy.
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Written by Paxtyn Merten. Story modifying by Carla Pineda. Extra modifying by Kelly Glass. Copy modifying by Tim Bruns.
