Builders Benefit from a Boom in Auto-dealership Construction
Contractors who have made inroads in auto-dealership construction are finding these to be good times indeed, as area dealers, from solo stores to large chains, engage in what can only be described as a building boom. The reasons are myriad, from an improving economy to demands from car makers that showrooms have a consistent look, to changes in the way cars are purchased and serviced today, and how 21st-century dealership design reflects those shifts.
If there’s one driving force behind all the auto-dealership construction and expansion over the past few years, Bill Peffer noted, it is, quite simply, a growing economy.
“The reason you’re seeing dealerships around the country refurbish is because the economy is really good, and a good economy drives good sales of new cars, trucks, and SUVs,” said Peffer, president and chief operating officer of the multi-state Balise Auto Group, which boasts several dealerships, focusing on different brands, in the Greater Springfield region. “More dealerships mean more points to sell the products — although dealers are finding the competition is pretty strong as well.”
Balise has been renovating and expanding in the area, most recently with a new Hyundai dealership on Columbus Avenue in Springfield, but with several new facilities over the past decade. Meanwhile, the Lia Auto Group has built and renovated new stores across the Pioneer Valley, as have TommyCar Auto Group in Hampshire and Franklin counties, Sarat Ford Lincoln in Agawam, Marcotte Ford in Holyoke, and Fathers & Sons in West Springfield, just to name a few.
“Part of it is the growth of the industry,” added Eric Forish, president of Forish Construction in Westfield, one of the region’s leading builders of auto dealerships, a tradition that started with his father in the 1940s. “Most dealers in our area have multiple locations, multiple brands, multiple facilities. That’s the nature of how they operate in their industry. And the volume of activity at each location often requires growth in the size of the facility.”
Indeed, according to MiBiz, a Michigan-based business website, the facility, training, and technology expenses required to run a modern dealership favor larger dealer groups that can share back-office resources and spread out narrow margins over higher sales volumes.
Balise — which contracts with South Hadley-based Associated Builders on its Western Mass. construction and renovation — is certainly one of those large players. But more dealerships also means more challenges to stay on top of current trends.
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“They want to have more inventory, so parking areas get larger,” Forish said. “They want to be green-friendly, so they update their lighting fixtures in the parking lots; LED fixtures return tremendous savings from conserving energy. Then there’s the energy efficiency of the buildings themselves. There are a multitude of ways dealers try to stay current. Their products are new, and they want their facilities to be new facilities.
“Even on the service side,” he went on, “the technicians’ tools are way beyond anything they used to have. In the repair area, it’s all computerized. Their equipment is state of the art. Even the lifts themselves are very much different than the lifts of years ago. The whole operation is much more modern. Many types of businesses have to keep up with technology, and it’s no different in auto dealerships.”
But while area dealers focus on drawing in new business, manufacturers have their own ideas about what constitutes an ideal showroom and service center — and those changes are also helping to drive the current building boom.
The trend among car makers is to standardize, to some degree, the look and feel of showrooms that sell their brands, and they are in some cases providing incentives — and in others, simply issuing mandates — to renovate and modernize their showrooms.
“Most brands in the U.S. are well-established brands, with few new players over the past 25 or 30 years,” Peffer said. “As those brands mature, they develop touch points unique to the brand to differentiate from the next brand.”
These mandates can encompass everything from the exterior façade to the colors of the interior walls to the furniture where customers wait for service.
“What’s driving the process now is that manufacturers are requiring their dealers to upgrade to a new image,” Forish said. “These design programs are similar to chain restaurants, where you have to have a consistent national image. Car dealerships need to do the same in terms of exterior exposure and interior finishes.”
Forish should know, having tackled dozens of projects for auto dealers — most recently multiple projects for Curry in Chicopee, Sarat in Agawam, and the New York-based Lia Auto Group. “We’ve done probably a dozen facilities for them,” he said of Lia. “We must be doing something right because they keep bringing us back.”
Other dealers have tapped Forish’s niche experience as well, from Marcotte Ford, which chose the company to build its new truck center in Holyoke, the only one of its kind in the region, to facilities for Steve Lewis Subaru in Hadley and Cernak Buick in Easthampton. “The names go on and on. We certainly have deep roots with the auto dealerships.”
As a partner with many different manufacturers, Peffer said, Balise is well aware of the demands they’re placing on dealers. For instance, the chain’s new Hyundai dealership on Columbus Avenue in Springfield boasts a six-bay express service element for customers who want to get in and out quickly, a separate cash-wash facility, and a ready-credit used-car space, all in separate buildings on the same grounds.
“That illustrates the Hyundai global brand identity,” he told BusinessWest. “This is the direction you’ll see Hyundai dealerships around the country move to.”
Meanwhile, Fathers & Sons is currently building a dedicated showroom in West Springfield for Audi because that maker, like others, wants dealers to move away from the old ‘auto mall’ facility that sells many different nameplates under one roof, to reduce the chance of a customer driving away with another maker’s product. Audi has also provided direction on the new facility’s design, what it calls a ‘terminal’ concept with an aesthetic dominated by glass and metal.
Although car makers are increasingly asking for specific design elements, Peffer said, dealer groups can bring consistency as well. “Balise Toyota, Honda, and Ford all have a well-lit, spacious, drive-up service lane where you’re met by the assistant service manager.”
These areas are typically marked with signage explaining the pricing for a range of basic services, another attempt to be transparent with customers who have likely already done their homework on the Internet.
“The nature of doing business as an auto dealer has changed, as well as the type of service they offer and the nature of customer-service relationships,” Forish added. “If you’ve taken your vehicle in for service at a newer dealership recently, you realize that, at most of these places, you drive into a building and are greeted by the service writer that reviews the scope of repairs or maintenance you’re going to receive. Then you go relax in these wonderful customer lounges, which have high-definition TV, wireless access for your devices, and play areas for the kids.
“It’s all about the experience for the customer,” he went on. “And the dealerships — especially if they have some age to them — need to get to these current standards to be part of a brand.”
As manufacturers ramp up mandates for standardization in their showrooms, MiBiz notes, some dealer groups have resisted the change. A 2013 study by auto-industry consultant Glen Mercer found that, while expansion of showrooms and service departments can pay off on the bottom line, other modernization efforts bring little return on investment.
Still, customers appreciate changes aimed at improving their experience, Peffer said.
“More and more people start shopping for prices online, and by the time they get to the dealership to make the purchase, they’re there to buy, as opposed to just kicking the tires,” he told BusinessWest. “They get all their information online, and by the time they hit the showroom floor, they’re looking for a good experience.
“That’s what differentiates a dealer from another dealer,” he went on. “And the facility makes the experience. How convenient is it? How inviting is it? Is there ample parking? Is there a delivery area for new cars? The footprint for dealerships has really changed to amplify the experience. They’re not just big boxes with a bunch of inventory.”
In short, he said, the modern dealership reflects what customers want, and the list is a simple one. “They want greater transparency with the advent of the Internet. And you have to provide convenience and a logical flow to how their car is serviced.”
On those points and others, too many dealerships built decades ago simply fall short. That, in turn, should continue to provide plenty of opportunity for contractors looking for a hot niche to drive new business.
Joseph Bednar can be reached at [email protected]