The U.S. automotive retail landscape has demonstrated remarkable stability through a turbulent first of half of 2025, even as franchise counts saw a slight reduction. According to Urban Science’s 2025 Mid-Year Automotive Franchise Activity Report, the total number of franchises—brand relationships at dealership locations—dropped from 30,124 at year-end 2024 to 29,813 by July 2025.
This franchise reduction contrasts with actual dealership growth. The number of U.S. franchise dealerships increased from 18,374 in 2024 to 18,393 by July 2025, indicating that while some brand partnerships ended, physical retail locations remained operational.
“Though there was a slight decline in franchises during the first half of the year,” said Mitch Phillips, global director, data, Urban Science. “2025 has shown signs of stability in other areas with steady increases in dealership and EV sales counts.”
This stability extends to geographic markets as well. According to Urban Science data, 97 percent of core-based statistical areas (CBSAs) in the U.S. experienced no net change in dealership count—defined as plus or minus one store. This represents an improvement from 95 percent stability at the end of 2024.
Texas Leads Dealership Expansion Across Key Growth States
Some regional expansion did still occur though as it revealed where automotive retailers see the strongest growth opportunities. Texas led the nation with seven new dealerships in the first half of 2025, maintaining its position as the most active state for dealer network expansion.
Four states tied for second place with four new dealerships each: Louisiana, Michigan, North Carolina, and New Jersey. Notably, Florida and California, traditionally among the most active states for dealership openings, fell out of the top five despite continuing to add stores. This shift suggests that growth may be dispersing beyond some of the largest markets as retailers seek favorable business climates and rapidly growing populations.
Throughput Decline Reflects Broader Market Pressures
Despite franchise stability, dealership throughput, the number of vehicles sold per location, fell by five percent or 48 units per store during the first half of 2025. This decline comes after record sales performance in 2024, indicating that retailers face genuine demand challenges.
The throughput reduction reflects several market pressures. Rising interest rates continue to impact monthly payment affordability for consumers. Supply chain disruptions, while improved from pandemic levels, still create inventory challenges and tariffs did not help on that front.
Additionally, the transition toward electric and other high-tech vehicles requires different sales approaches and customer education, potentially slowing transaction speed as both dealers and consumers navigate new technology considerations.
Historical context shows that throughput fluctuations are normal, but the five percent decline still represents a meaningful shift that requires operational adaptation. Dealers who can maintain efficiency while adapting to changing consumer preferences will be best positioned to weather this transition. Those who focus on profitability per transaction rather than pure volume may be better positioned for long-term success.
Electric Vehicle Sales Momentum Accelerates
While overall throughput declined, electric vehicle retail sales provided a bright spot with significant growth. Urban Science projects that EV retail sales, including battery electric vehicles, plug-in hybrid electric vehicles, and hybrid electric vehicles, will increase by 16 units per dealership from 155 at the end of 2024 to 171 in June 2025.
This represents a substantial percentage increase in EV throughput that partially offsets traditional vehicle sales declines. The growth spans all electrified categories but may be short lived as it coincides with the pending removal of government tax incentives at the end of September.
Preparing for the Second Half Challenges
The contrasting trends of the first half—stable networks but declining throughput, strong EV growth but future lack of tax incentives—create a complex environment for automotive retailers planning second-half strategies.
The geographic expansion in states like Texas, Louisiana, and North Carolina suggests that growth opportunities exist for dealers willing to enter new markets or expand their coverage areas. However, success in these markets requires understanding local consumer preferences and competitive dynamics.
For the industry overall, the data suggests a period of adjustment rather than crisis. Success will increasingly depend on operational excellence and strategic adaptation rather than simply maintaining market presence.
“Regardless of the trend direction, these fluctuations underscore the importance of understanding real-time sales data and leveraging it to create an optimal, science-driven and competitive sales and service network aligned with customer needs,” said Phillips. “Doing so positions automakers and their dealerships to drive loyalty and profitability as consumer preferences and sales patterns continue to transform, and to better mitigate risks and seize opportunities regarding key business priorities across sales and service operations.”
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