Automobile dealerships are the real estate that the automotive industry uses to sell its products. Information published by the National Automobile Dealers Association (NADA) indicates that the number of franchised new car dealerships peaked in 1949 at 49,200 and has declined almost every year since. According to Urban Science, the number of dealerships was down to 17,838 at the end of 2013. The decline in inventory was particularly sharp from 2008 to 2010. No material changes in the supply of dealerships have occurred since then. From a physical aspect, the improvements for an auto dealership may be in one or multiple buildings and typically include a showroom area, offices for both sales and administrative functions, service areas, and waiting areas or lounges. Service areas may include a collision shop or an automated car wash. Sites are typically large relative to the improvements they support, since space is needed for vehicle display and the storage of automobiles in inventory. While the physical features of dealerships are important, perhaps even more fundamental to valuing this property type is an understanding of how the automotive industry markets vehicles and how real property fits into that model. This article will cover the following topics: 1. Definitions of terms relevant to automobile dealerships 2. How dealership franchises work 3. The profile of a typical automobile dealer 4. The components of an automobile dealership 5. Dealerships that sell single brands versus those that sell multiple brands 6. The European dealership model and how it applies to the United States.
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