Greg Gardner  |  Detroit Free Press |  August 24, 2011

In an encouraging sign of the auto industry’s modest recovery, the number of car dealerships increased in the first half of 2011 by 0.4%, the first increase in 10 years, according to Urban Science, a Detroit-based retail consultant.

This comes after a 4.4% drop in the number of dealerships from 2009 to 2010. But the number of franchises dropped 2.4% to 29,360, reflecting the phase-out of Mercury and the ongoing consolidation of Lincoln dealers.

In metro Detroit the number of dealerships was essentially flat, according to John Frith, Urban Science vice president of retail channel solutions. He did not have the exact number, but the Detroit Automobile Dealers Association web site set it represents 240 dealerships in metro Detroit.

The other positive news in the consultant’s latest research is that the average number of vehicles sold annually by U.S. dealerships rose from 656 in 2010 in 711 in the first half, based on the assumption that Americans will buy about 12.6 million new vehicles this year.

“The precipitous decline has stopped and we’re seeing some stability,” Frith said.

For perspective, the nation’s 17,725 dealerships is down from nearly 25,000 in 1990.

In the last six months, Ford’s closing of its Mercury brand has been partially offset by Chrysler opening of about 130 Fiat stores to sell the Fiat 500 minicar. Frith said Chrysler has also restored some dealerships after closing nearly one-quarter of its 3,200 dealerships as part of its 2009 government-backed bankruptcy restructuring.