Are Dealers Moving to Where the Car Sales Are?

As we approach the midpoint of the 2020s, the U.S. auto retail landscape looks markedly different from just five years ago. The industry has faced both novel and unexpected disruptions but beyond the showroom, larger migration patterns and demographic shifts are reshaping the market. While some pandemic-era trends have reversed, the pandemic itself left lasting effects on where people live and how they shop for vehicles.

So, are dealerships adjusting their strategies to reflect these changes? Here are three key trends to keep in mind:

Growth in Southern Dealerships Reflects Shifting Populations

According to U.S. Census data, Americans have been steadily migrating south. Dealership growth appears to be following suit.

In the 2024 Automotive Franchise Activity Report, Urban Science notes that Southern states added the most new dealerships last year. Florida led with 21 new dealerships, followed by Texas with 14, Georgia with nine, and North Carolina with seven. Meanwhile, several Northern and Midwestern states lost dealerships, including Missouri with a loss of 10, Pennsylvania with a loss of eight, and Ohio and Wisconsin each losing four.

This trend suggests dealers are rethinking their physical locations in response to where customer bases are growing.

Big Metros Are Rebounding From Pandemic-Era Population Loss

During COVID-19, many major metro areas saw significant population losses. Between 2020 and 2021, the New York-Newark-Jersey City metro area lost nearly 277,000 people, Los Angeles-Long Beach-Anaheim lost 214,000, and Chicago-Naperville-Elgin lost 77,000.

But the U.S. Census reports that many of these metros have made remarkable comebacks post-pandemic. New York metro added over 213,000 people from 2023 to 2024, while Los Angeles clawed back over 41,000 and Chicago added 71,000 in that same period. Other rebound gainers include Washington-Arlington-Alexandria, San Francisco-Oakland-Fremont, Miami-Fort Lauderdale-West Palm Beach, and Boston-Cambridge-Newton.

While dealership growth has generally followed long-term migration patterns south, these rebounds signal that metros have remarkable population resilience. Many are still growing and remain strongholds for new vehicle buyers.

Generation X and Millennials' New Car Sales Surpass Boomers

At the same time, another demographic transformation is reshaping dealership strategy. Baby boomers, once the largest new vehicle-buying-age cohort, now trail other generations.

In 2019, baby boomers made up just over 32% of all new vehicle sales. By 2021, that dropped to just over 28%, while Gen X buyers claimed nearly 33%. In 2022, millennials also pulled ahead, claiming just over 29% of sales as baby boomers' share fell to 26%.

This isn't just a shift in sales numbers; it's a change in behavior. Younger buyers have different expectations surrounding the car-buying journey. For example, CDK found that Gen X and millennial car buyers are more enticed by photos on the dealer website and prefer to use an AI assistant to book an appointment. Additionally, many young millennials are first-time car buyers.

Dealers need to consider not just where these buyers live, but also how they want to shop.

Together, these trends show that what worked in the past won't necessarily work now. Yes, it's important to follow metrics at a store level, but it's just as essential to zoom out and ask: Are your customers relocating? Are you targeting buyers no longer in your ZIP code? Are you selling to millennials the same way you sold to baby boomers?

Successful dealerships will try to find the balance between micro-level data and macro shifts in migration and demographics. The market is always changing, and dealers who stay agile and anticipate where the next generation of buyers will be are in the best position to grow.