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Cruise Control

As the 2019 models continue to roll into area showrooms, area auto dealers report that sales remain brisk, at something approximating the levels of 2017, which was a very robust year for the industry. Meanwhile, a host of trends have continued or accelerated, including torrid sales of SUVs and trucks, a high volume of used-car transactions, and a heavy emphasis on improving the overall consumer experience.

Jeb Balise held his hand up with his thumb and forefinger barely a half-inch apart.

And then, for emphasis, he brought them even closer together.

“They’re down about that much,” Balise, president of Balise Motor Sales, told BusinessWest, referring to new car sales in 2018 (which still has a few months left, obviously) compared to a year ago.

Essentially, sales are flat, which, as Balise and others told us back at the start of this year, around President’s Day sales time, is a really good thing, because auto sales — an almost always accurate barometer when it comes to the national economy — have been rock solid the past several years.

“They’re just about the same as last year — down a tiny, tiny bit,” said Balise, adding that there is just that much less pent-up demand (resulting from cars, like their owners, living longer lives these days) this year than the past few. But there are still a number of other factors driving steady sales, including a still-booming economy, record-low unemployment, quality vehicles across the board, attractive incentives from the manufacturers, and more.

So sales are still humming, and Carla Cosenzi, president of the Tommy Car Auto Group, believes that at her four dealerships, sales are actually up from a year ago.

“We’re seeing an increase in 2018 over last year, and 2017 was a very good year for us,” she said, echoing Balise’s comments. “It’s not a significant increase, but an increase nonetheless, and 2017 was a really good year.”

Overall, 2018 has been a year when recent trends in the auto market have maintained their speed or even accelerated slightly. These include red hot used-car sales; white-hot SUV and truck sales (especially the former); growing interest in electric and hybrid vehicles, although they still comprise a very small segment of the market; and new levels of convenience for the consumer.

“We’re seeing an increase in 2018 over last year, and 2017 was a very good year for us. It’s not a significant increase, but an increase nonetheless, and 2017 was a really good year.”

Peter Wirth, co-owner of Mercedes-Benz of Springfield, which opened just over a year ago, says he’s seen all or most of the above at his dealership, a facility that has met or exceeded the lofty goals set for its first year of operation.

And that’s especially true in an often-overlooked but quite important segment of this business — the service department.

There are many qualitative measures for this, he said, especially the fact that the dealership recently hired its 12th technician, tripling the number it started with, for the 14-bay facility.

This surge in business in the service department stems from a variety of factors, from how long Mercedes models stay on the road to the fact that the next-closest dealership is in Hartford, said Wirth, adding that demand has risen steadily since the ceremonial grand-opening ribbon was cut — a clear sign that the new dealership has made its presence known.

“The floodgates opened, and in a good way,” he noted. “We’ve been at capacity for the next few days in the service department since the day we opened, and way we’re keeping up is by adding capacity so we can keep it at a reasonable timeframe for customers.”

“It’s been a 100% success story — we’ve never had to send a technician home early; we’ve never run out of work,” he went on. “Not just in the amount of work we’re getting, but also in the team we were able to build.”

For this issue and its focus on auto sales, BusinessWest talked with several area dealers to gauge the local market and the forces, well, driving it. Cars aren’t selling themselves, obviously, but in many respects this industry is on cruise control.

Pedal to the Metal

Those who spoke with BusinessWest said that, these days, the new models arrive at the dealership almost year round, unlike years ago, when all or most would be revealed in the early fall, to considerable fanfare.

Still, many new models do make their debuts as the leaves change colors, and thus this is a good time to take stock — literally and figuratively — of what’s happening at area dealerships and within this all-important sector.

Jeb Balise, seen here at his company’s Kia dealership on Riverdale Street

Jeb Balise, seen here at his company’s Kia dealership on Riverdale Street, says new-car sales are down just slightly from 2017, but still at a very high volume.

First and foremost, said Balise, this remains a buyer’s market in most all respects, even though demand remains high, especially for those trucks and SUVs. That’s because supply is also high as the manufacturers continue to make product and dealers try to move it — usually with good success.

“All of the manufacturers are producing plenty of cars, and demand is off just slightly from a year ago — just enough to put the consumer in the driver’s seat, if you will,” he told BusinessWest. “Incentives have never been better — even for SUVs.

“It’s not because there isn’t demand,” he went on, referring specifically to the SUV segment of the market. “It’s more because all the manufacturers have them now, and they’re trying to grab their piece of the pie.”

The seismic shift (another industry term) to SUVs has been ongoing for quite some time now, but it moved to an even higher gear in 2018.

Indeed, all those we spoke with said sales of SUVs now exceed those of cars (sedans) for almost all models they sell. Overall, Balise said, truck and SUV sales now account for roughly 60% of all vehicles sold and leased.

And this trend toward SUVs extends to some manufacturers renowned for their cars, such as Volkswagen and Volvo, said Cozenzi. Indeed, as she stood in the Volvo dealership recently acquired by the TommyCar Auto Group, she was surrounded by SUVs — small, medium, and large — on the small showroom floor.

They’re all selling, at Volvo and other dealerships, and especially the smaller SUVs, said Cosenzi, adding that they appeal to drivers of all ages for reasons ranging from accessibility (they’re easier to get in and out of, for most people, anyway) to decent gas mileage.

“The smaller SUVs, like the Rogue [Nissan] and the Tiguan [Volkswagen], continue to dominate,” she said. “The Rogue is the number-one-selling vehicle at the Nissan store, and it’s been that way for a few years now.”

Even Mercedes is now selling and leasing more SUVs than cars, said Wirth, adding that the company passed that milestone in 2017, and the arrow continues to move upward.

Still, there are plenty of sedans to be sold, said all those we spoke with, noting that, overall, car makers are turning out quality, easy-to-maintain products across the board, giving consumers plenty of often-hard choices to make, thus motivating the manufacturers to offer solid incentives.

And soon there will be an intriguing new choice, said Wirth, noting the arrival — probably by early next year — of the Mercedes A class, an entry-level luxury vehicle, complete with some different bells and whistles, that should bring that famous nameplate onto more driveways.

“This opens us up to a whole new customer,” he said. “You might have someone attracted to this car not because of the Mercedes-Benz design or the Mercedes-Benz safety or the brand image; it might be just because of the technology in the car. You can say, ‘hey, Mercedes, I’m cold,’ and the temperature will come up, or ‘hey, Mercedes, I’m hungry,’ and it will list the restaurants. And this is in the car that represents the entry point, not the $100,000 model.”

Staging a Coupe

Looking back on his first year of doing business in the Pioneer Valley, Peter Wirth, who previously managed a Mercedes dealership on Long Island, said this past 12 months have certainly been a learning experience.

Among the things he’s learned is that this market is somewhat more conservative than the one he left — a trait that shows up in higher volumes of used-car sales as compared to new-car transactions and more sales than leases — and also generally less aware that Mercedes is now more affordable and therefore more attainable than it has been historically because of the introduction of entry-level models.

Peter Wirth, seen here with members of the service team at Mercedes-Benz of Springfield

Peter Wirth, seen here with members of the service team at Mercedes-Benz of Springfield, says the company has exceeded all the goals it set for its first year of operation — especially in service.

“We still have some work to do on the matter of affordability,” he told BusinessWest, adding that perceptions about the Mercedes brand being beyond one’s reach remain despite more than ample evidence to the contrary. And that goes across the board, for passenger and commercial vehicles alike.

But he’s hoping that area residents will follow the lead of Jeff Bezos, who recently ordered 20,000 Sprinters (a cargo van made by Mercedes) for Amazon.

“I’m sure he did the math before he placed that order — I’m sure he sat down and looked at the life-cycle cost, the reliability, the down time, and everything else. He’s a pretty clever guy, and the fact that they committed to us says something.”

To Wirth, it says people need to look beyond the sticker price on the windshield (and Mercedes is competitive in that regard as well with many models) and look at the other ingredients that go into the equation, such as dependability, maintenance costs, convenience, and the sum of all these parts.

“We’ve been having the conversations regarding affordability, but also about how this is an amazing value proposition,” he noted. “We’re still working on it, but we’ve made great headway.”

Something Wirth didn’t need to learn, because he knew it already, is how important customer service and providing convenience are these days, especially to time-strapped, increasingly demanding customers.

“Time is money,” he said, adding that the dealership works to save customers some of that precious commodity in every way it can, from picking up a car bound for the service department at one’s home to getting them in and out of that service waiting room as soon as possible.

Cosenzi agreed, and said the TommyCar Auto Group has responded with something called Click, Drive, Buy, a new program that enables someone to buy or lease a vehicle almost entirely from home and on the internet.

“Especially at our Volkswagen store, we’re seeing a lot of our customers complete the entire transaction online and just come into the dealership to take delivery of the vehicle,” she explained. “I don’t think we anticipated that it would be as popular as it is, but people enjoy the convenience; they like buying a car this way. And it’s been popular with people of all ages.”

Gearing Up

As he brought his forefinger ever closer to his thumb while comparing sales this year to last, Balise emphasized, again, that anything at or near last year’s mark is quite good.

And while he didn’t want to make too many projections about 2019, because things can change quickly, as history shows, he implied that he may well be doing the same thing with his fingers this time next year.

That’s because the basic laws of supply and demand — not to mention an economy still in high gear — should keep this industry operating in what amounts to the status quo.

And that’s a high-octane sales climate.

George O’Brien can be reached at [email protected]

Autos

Expansion Mode

Carla Cosenzi says the recently acquired Volvo dealership in South Deerfield is a perfect fit for the TommyCar Auto group.

Carla Cosenzi says the recently acquired Volvo dealership in South Deerfield is a perfect fit for the TommyCar Auto group.

Carla Cosenzi says that, like most companies in its category, the TommyCar Auto Group is always on the lookout for possible additions to the portfolio of dealerships.

But growth for the sake of growth is not what this venture — started by her father, the late Tom Consenzi, and taken to a new level by Carla and her brother, Tom — is looking for.

“It’s important for us to have the right brand at the right time and the right location moreso than just looking to grow,” she told BusinessWest, adding that all those boxes could certainly be checked with the company’s recent acquisition of Pioneer Volvo in South Deerfield.

Right location? Check. The dealership is only a few miles north on I-91 from the group’s other facilities — Northampton Volkswagen and the adjacent Country Hyundai, as well as Country Nissan on Route 9 in Hadley.

Right brand? Check. Volvo has always been renowned for its quality and focus on safety, and it has recently introduced several new models, including a small SUV, the XC40, that is turning heads in the industry.

Right time? Check. Auto sales in 2018 are just slightly off the levels set in 2017 — although the TommyCar Auto Group has registered growth over that span — but overall volume remains at very high levels.

Overall, this acquisition is solid in every respect, said Cozenzi, adding that that it gives the TommyCar Auto Group its first real entry into the luxury-car bracket, meaning a brand that won’t really compete with the three sold just down the interstate.

Meanwhile, the group’s size and economies of scale will enable it to give the Volvo dealership greater visibility and opportunities to grow.

“It’s a small dealership, and it was family-owned and operated, so we’re going to continue the same values they had,” she explained. “But since we’re a bit of a larger group, we have the ability to add more amenities than they were able to provide, but with the same core values.

“We’ll grow the brand — we’ll give the brand more exposure through advertising,” she went on. “And since we’re a larger group with more of a following, we’ll be able to attract more people to the dealership, and to Volvo.”

Given all this, it’s understandable why the TommyCar Auto Group has had its eye on the Volvo dealership for some time, and also why it moved quickly and decisively when the family-owned operation came on the market earlier this year.

“It’s a small dealership, and it was family-owned and operated, so we’re going to continue the same values they had. But since we’re a bit of a larger group, we have the ability to add more amenities than they were able to provide, but with the same core values.”

“This is a brand that we’ve been looking at for a long time because it fits in well with the other manufacturers we have in the group, it’s a great location, and it’s a perfect size for us,” she explained. “We’re really attracted to Volvo and everything it stands for in terms of luxury and convenience it provides to customers, the value of the brand, and the safety of the vehicle.”

Cozenzi said the dealership in Deerfield is, indeed, small compared to most these days, and not exactly modern. However, it is comfortable and well-appointed. She said it is likely the company will renovate it in the short term and replace it in the long term, meaning over the next several years.

In the meantime, as she said, it is a solid addition to the portfolio, a brand with a number of redesigned models, cars, and SUVs alike.

“So it’s an exciting time for us to be getting involved with the brand,” said Cosenzi, citing the XC 40 as one example of a Volvo model in strong demand. “I’m coming to learn the brand, and it’s clear that they’re very innovative.”

As an example, she noted ‘Care by Volvo,’ a comprehensive package of services that brings new layers of convenience to customers.

“They take care of the essentials when they lease you a vehicle, including insurance, maintenance, repairs, a concierge service, and more,” she said. “So you can see them changing with the times, and it’s exciting to be partners with an manufacturer that’s so on edge with what’s happening.”

Like she said … the right brand and the right time — and the right location.

— George O’Brien

Autos Sections

Driving Forces

The auto market has been in high gear for the past several years, and area dealers expect that pattern to continue, and for several reasons. These range from a solid economy and abundant consumer confidence to quality vehicles and lingering pent-up demand.

‘Flat.’

In most discussions involving business, that term has a somewhat negative connotation to it. And in many ceases, we can leave out the ‘somewhat.’

But in the case of the auto-sales industry and local dealerships … ‘flat’ has a pretty good sound to it these days. In fact, just about everyone who would use images of George Washington and Abraham Lincoln in their promotions this week, or tie red, white, and blue balloons to the cars in their showroom come July, would be pretty happy with ‘flat.’

Just as they were last year.

Indeed, since the very dark days during and just after the Great Recession, car sales have rebounded nicely, with the high-water mark, if you will, coming in the 2016 sales year, with nearly 17.5 million light vehicles (cars, SUVs, and pickup trucks) sold nationwide.

Last year was off that pace, but only slightly, with more than 17.1 million light vehicles sold. And the projections for 2018 are for pretty much the same, with maybe another slight decrease of 1% or less.

But, again, 1% off what? Even in the super-solid years leading up to the economic nosedive a decade ago (years 2001 to 2006), total sales were under or just slightly above 17 million.

As we said, ‘flat’ has rarely looked so good.

“Yes, last year was off what it was in 2016, but you’re coming off historic highs — and the drop was minuscule,” said Jeb Balise, CEO of Balise Motor Sales, adding (after checking his phone to make sure he had the numbers right) that sales this January were up 1% over a year ago, this despite some bitterly cold days, a few snow days for many adults, and even that dreaded bomb cyclone thing.

Jeb Balise says projections are for another flat year for auto dealers. But ‘flat’ is more than acceptable given the high volume of sales in recent years.

Jeb Balise says projections are for another flat year for auto dealers. But ‘flat’ is more than acceptable given the high volume of sales in recent years.

And the various forecasts he’s seen project sales of between 16.7 million and 16.9 million light vehicles, which would be another outstanding year.

Other dealers we spoke were equally upbeat and happy with ‘flat’ or something approximating it, and said a host of factors are contributing to solid sales and optimism that this trend will continue. A healthy stock market (until quite recently), a sound economy, still-low interest rates (albeit amid concerns that they will rise), low unemployment, large amounts of consumer confidence, well-made products, lots of inventory, attractive incentives from the manufacturers, some lingering pent-up demand, and the basics of supply and demand are all on that list.

“It’s just a good time to be buying a car,” said Don Pion, president of the Chicopee-based dealership started by his father, Bob Pion Buick GMC. “The product is good — the best I’ve seen since I’ve been in the business. They’re good products, they get good fuel economy, maintenance is pretty inexpensive on these new cars today, the manufacturers have been aggressive with their offers, there are good lease offers … it’s all good.”

Michelle Wirth, co-owner of Mercedes-Benz of Springfield, which opened its doors last fall, concurred.

“We have a very optimistic outlook on 2018,” she said. “People are feeling good about the economic outlook, and that allows them the mindset to spend money a little more than they would have in years past.”

Meanwhile, solid sales are not the only trend within the industry on track to continue. Others include the soaring popularity of SUVs and crossovers — Wirth noted that, for the first time last year, Mercedes reported more sales of those types of vehicles than cars — and an ongoing evolution in the role of the dealership.

Indeed, where once that was a place to check out the new models, see what they cost, and explore available options, consumers can now do a lot of that, if not all of that, on the Internet. By the time they come to the dealership, they know what they want, and they know what they expect to pay. Thus, the role for those at that facility is to make the rest of the process as quick and painless as possible.

In response, TommyCar Auto Group, comprised of three dealerships selling Nissan, Hyundai, and Volkswagen, has come up with a new product called Click, Drive, Buy, whereby the consumer can do pretty much the entire buying or leasing process online, and also get a car delivered to their home for a test drive.

“They can fill out a credit application, do the pricing up front, they can go through all the financing options and rebate options and see what they qualify for, all without coming to the dealership,” said Carla Cozenzi, president of the group. “They can even research all of the after-market products like warranties and gap insurance, all of that through our website.

“We’ve evolved because we had to,” she went on, speaking for everyone in the industry. “Customers can literally do it all from their iPhone.”

Fast Times

As he talked about the current market and the forces driving it, Pion referenced one recent vehicle traded in to get some of his points across.

“It had 250,000 miles on it, but it looked like it only had about 50,000 miles on the odometer,” he told BusinessWest. “It was in great shape; you would never know it had a quarter-million miles on it.”

And this was certainly not an isolated incident, he went on, adding that these high-mileage vehicles he’s seeing on a regular basis say a lot about the market today.

They speak to the quality of the cars on the road today and their durability — “you watch the cars drive by every day, and you see a lot of older models,” said Pion — but also to the fact that, eventually, people need, or want, to turn them in.

And this lingering pent-up demand for new models — although there is much less of it than was a few years ago — is just one of many reasons why Pion’s dealership had a 2017 to remember.

Don Pion, seen here with his son, Rob, general manager of the dealership, says the soaring popularity of SUVs and crossovers has helped fuel solid sales for the industry.

Don Pion, seen here with his son, Rob, general manager of the dealership, says the soaring popularity of SUVs and crossovers has helped fuel solid sales for the industry.

Indeed, Buick sales were up 40% over 2016, he said, while GMC sales were up 30%, and used-car sales were up 20%.

Pion attributed these strong numbers to that combination of factors he described above. And while he’s not expecting a repeat, exactly, he’s projecting another very solid year.

“No one’s looking to set a record,” he told BusinessWest. “But I don’t think we’ll see any declines, only more-modest growth, perhaps.”

Consenzi agreed, and told BusinessWest that 2017 was a solid year for all three stores within the group, especially Nissan, and she is expecting improvement on those numbers across the broad in 2018.

Balise was also optimistic, and said that the pent-up demand from several years ago has been replaced by a state of general “equilibrium,” as he called it. Surveying the market now, he sees still-ample demand and considerable inventory, an intriguing mix.

“Business is good, and plenty of cars are being sold,” he explained, “but it’s a little more competitive amongst dealers, which is always good for the consumer.”

As for Wirth, she doesn’t have any numbers from last year to use as the basis for projections, or many of them, anyway.

As noted, the dealership opened its doors in September, and that last quarter or so of 2017 was essentially a time for reintroducing the brand to this region after nearly a decade’s absence, she said, adding that this process is ongoing and has many nuances to it.

Indeed, reminding people that they no longer have to drive to Hartford or Route 128 to buy a Mercedes or get one serviced is just part of the equation, she went on.

Another big part is introducing the region to the people behind that dealership with the huge Mercedes sign in front of it — and they’ve done so in ways ranging from a huge grand opening to a presence on the ice at the MassMutual Center for Thunderbirds games, to various forms of support for several area nonprofits.

Still another is educating people about the brand, how it has evolved in some ways — all those SUVs, for example — and making it clear that, in many cases, and despite popular perception, it is not beyond their reach.

“The brand stands as a symbol of success and the ultimate in luxury, and it’s just a big brand to wear,” Wirth explained. “Mercedes is not just for folks who have made it or are about to retire and end their career; it’s very much for the person who’s still climbing.”

Elaborating, she said the dealership, and Mercedes-Benz in general, are trying to attract people not of a certain age group or income bracket, but people with a certain mindset.

“They’re young at heart, they’re entrepreneurial, they enjoy craftsmanship and brands that stand for something,” said Wirth as she explained this mindset. “As for the brand, they look at it like, ‘this is this best, everyone deserves the best, so reward yourself.’”

Into a Higher Gear

Getting back to the outlook for 2018 and the factors driving those optimistic projections, one of the influencing forces is the quality of the vehicles now parked at dealerships across the region. Indeed, while those cars and SUVs with 100,000 or 200,000 or even 300,000 miles on them are still getting the job done, the products rolling off the assembly line are appealing — enough to prompt some trade-ins.

Michelle Wirth says the role of the dealership continues to evolve, and the focus now is on transparency and making the consumer’s experience as easy and painless as possible.

Michelle Wirth says the role of the dealership continues to evolve, and the focus now is on transparency and making the consumer’s experience as easy and painless as possible.

Especially the crossovers and SUVs. As noted earlier, even brands that have built their heritage on sedans, like Mercedes, are selling more SUVs than cars these days. Buick, known for most of its existence for its sedans, now has a lineup flush with SUVs and crossovers, said Pion, and there’s only one true sedan left — the LaCrosse.

The Balise company counts nearly a dozen makes in its portfolio, including Ford, Chevrolet, Toyota, Honda, Nissan, Lexus, Mazda, Subaru, Kia, and more, and for nearly all them, SUV and crossover sales now exceed those of sedans, said Jeb Balise.

And there are many reasons for this, everything from relatively low gas prices to the additional room in the SUVs and crossovers; from the added height of such vehicles, and the fact that they’re somewhat easier to get in and out of, to their ability to take someone virtually anywhere they want to go.

“People are more active,” said Wirth. “They want to go more places and do more things, and those vehicles present themselves as being more versatile.”

Cosenzi agreed, and noted that most manufacturers, including those she represents, now have SUVs and crossovers in small, medium, large, and even micro sizes, and they are attracting consumers in all age groups. And for most people trading in a car, she said, the SUV they’re getting into will offer comparable mileage.

Even Volkswagen, which has traditionally lagged well behind in SUV and crossover sales, is making great strides with additions like the Tiguan, a smaller SUV, and the Atlas, a much larger model.

“Volkswagen always lacked in that category, but now it’s catching up,” she said. “We’re seeing it across all brands — the demand is really healthy in the SUV/crossover market.”

All that said, compact and mid-sized cars are still a huge segment of the market, said Balise, using one of the more iconic nameplates, the Toyota Camry, and some numbers off the top of his head to get his point across.

“Let’s just say Camry was selling 400,000 units and now they’re selling 315,000; that’s still a lot of momentum for that segment,” he said. “While the phenomenon is happening and it’s material — it impacts business, and we have to figure out what to do — it’s not a total-sum game. Sometimes you look at these reports and it looks like you’re never going to sell a car again, and it’s all going to be trucks — it’s not that dramatic.”

But it is still a sizable movement within the industry, as is the overall ‘dealer experience’ and the changes that have come to it, and the ever-greater emphasis on transparency and all that phrase implies.

As noted earlier, much goes into this equation, but it comes down to making life as easy as possible for the consumer during and after the buying or leasing process.

Putting it another way, Wirth said, while no one realistically expects to enjoy the car-buying process, dealers, and especially hers, are succeeding in making it far less painful that it was years ago.

How? By being up front and transparent with pricing, putting information in consumers’ hands, and adding convenience when possible, such us applying for financing online.

Balise agreed. “When it comes to the customer, their time is extremely important to them, and they don’t want to waste it,” he explained. “So when they come in, you need to be on your game and give them the information in an easy, transparent way; what you’re really doing is being as helpful as you can to help them make a decision.”

Pion echoed those thoughts, noting that a good number of people who come into a dealership ready to buy want to drive off in their new vehicle the next day — or even later that day — and dealers have to respond to such whims with inventory and an ability to get such deals done.

But these efforts to enhance the customer experience don’t end with the sale, as those in this industry like to say. Indeed, service is a huge part of the equation, especially with cars remaining on the road as long as they are, and emphasis on this part of the experience manifests itself in everything from spacious, well-appointed waiting areas to car washes built into the dealerships.

At the Mercedes dealership, said Wirth, the technician will create a video of the vehicle in for service and text it to the customer so he or she can see what the issue is.

“We’re in it for the long haul, and it’s more valuable to us and more important to us that people feel taken care of and understood,” she went on. “It’s more about how we meet people’s needs at that moment in time and have all the information at that moment.”

Full Throttle

The dealers we spoke with said those Presidents Day sales that once dominated the airwaves and turned Washington and Lincoln into pitch-people are still a part of the landscape, just not on the same scale as years ago.

Those sales were needed to propel the industry out of winter doldrums and create a bridge to spring, said Pion and Balise, both industry veterans. Today, car selling is different, and there is more of a even flow of transactions throughout the year — although a boost in February is always welcome.

That’s just part of a changing landscape in this business, where ‘transparency’ is now the watchword, and where ‘flat’ sounds really good.

George O’Brien can be reached at [email protected]

Autos Sections

On the Move — Always

The new car wash in West Springfield is the latest addition to an ever-growing portfolio of facilities for the Balise Auto Group.

The new car wash in West Springfield is the latest addition to an ever-growing portfolio of facilities for the Balise Auto Group.

As he talked about the very latest addition to the already-expansive portfolio for the Balise Auto Group, a car wash just off Riverdale Street in West Springfield, Jeb Balise said it was a capital-intensive, very necessary supplement to the collection.

Capital-intensive because car washes, as some might know but others might not, are now very sophisticated, computer-operated facilities offering an ever-greater array of wash options. And necessary because … well, consumers are becoming ever-more demanding, and, likewise, the auto business is ever-more competitive.

So auto groups like Balise need to respond with the proverbial ‘more’ and ‘better.’ ‘More,’ as in more products and services to offer those customers, and ‘better,’ as in better than the competition.

And this mindset reflects itself in everything from the company’s growing stable of car washes (there are now three, including two in Western Mass.) to the ongoing work to replace or renovate the group’s large roster of dealerships, including the Balise Nissan store a half-mile east of the car wash on Riverdale Street, to an insurance agency in Rhode Island as part of the mix.

“We’re making sure we’re giving the customer everything they want for support instead of just selling them a car,” said Balise as he talked about additions to the number of collision centers, used-car facilities, and more. “So if someone buys a car from us, they don’t have to worry about collision repair or getting their car cleaned or insurance; we can pretty much provide holistically everything they need for the life of that car.”

He offered those thoughts in an interview in one of the sales offices at Balise Nissan, the latest of the company’s dealerships to be replaced, or, in this case, given a huge makeover. Long operated under the name Jerry Rome Nissan, the facility now bears the Balise name.

Open for just over two months, the ‘new’ dealership was essentially gutted and rebuilt from the ground up, said Balise, adding that it is the first store selling this brand to incorporate new imagery and design elements developed by the carmaker.

The Nissan dealership on Riverdale Street now carries the Balise name. It’s the latest of the company’s dealerships to undergo extensive renovations or new construction.

The Nissan dealership on Riverdale Street now carries the Balise name. It’s the latest of the company’s dealerships to undergo extensive renovations or new construction.

“There was nothing left of the showroom — we stripped it right down to columns and roof, basically,” he explained. “We really rebuilt it, and you can feel it; you would never know it was a retro.”

That’s the word he chose for a dealership built in the ’80s and ’90s — before they became far more spacious (50,000 square feet in the case of the Toyota dealership, also on Riverdale Street), comfortably equipped, and customer-friendly.

As he talked about the Nissan store and offered a quick tour, pointing out its larger, revamped showroom and well-appointed service waiting area, Balise said there are a few minor touches to be completed before a grand opening can be staged — probably later this month.

And as those final touches are made, thoughts are already turning to what’s next, said Balise, adding that the company embarked on a massive campaign to make over facilities for all the brands it sells more than a decade ago, and there are still a few projects left to undertake.

One is the Balise Mazda facility on the other (north) side of Riverdale Street. Built in 1984, it is certainly showing its age, said Balise, adding that plans will be on the drawing board soon for either new construction or another extensive renovation.

Meanwhile, another nameplate in line to have a new home is Kia, which became part of the Balise stable in 2015 and has been housed in a small facility that was once a Mercedes dealership a decade ago.

Kia is a rising star in the auto galaxy, said Balise, adding that it has an attractive mix of cars, vans, and SUVs, and it will soon have a home befitting that status. Various options are currently being reviewed, and no formal plans have been announced, he went on, noting that both the Kia and Mazda facilities will be upgraded within the next 24 months.

“Our plans will be really impressive,” said Balise in reference to both projects, still in the developmental stage. “These will be either brand-new buildings or significant renovations — total change.”

As for the car washes, Balise said they are part of broader efforts to serve the full gamut of customer needs and provide additional layers of value.

The company started with a facility in Hyannis, where it also has several dealerships, then added one on East Columbus Avenue in 2016; the West Springfield location opened in January.

There are two more car washes on the drawing board for the next 24 months, said Balise, adding that the specific markets have not been identified.

The car washes offer ample evidence of consumers taking better care of their vehicles, but also of the value that auto groups are trying to provide.

Indeed, the car washes are strategically located to serve customers at the Balise dealerships (there are three on Columbus Avenue and a half-dozen on Riverdale Street), he noted.

Those who buy a car at any of the Balise dealerships get 60 days of free washes, he went on, and they also get special pricing on both everyday washes and the hugely popular ‘unlimited plans,’ whereby consumers can wash their car as often as they want for one monthly fee.

As for new dealerships, the company is always looking for new opportunities — in this market and others, he went on, adding that, despite an ongoing wave of consolidation within the industry, there are still a number of single dealerships and small groups that could be added to the portfolio if the conditions were right.

“Even with all the consolidation, it’s still a fragmented business,” he told BusinessWest. “The majority of facilities are owned by someone who might have two or three stores, or one store.

“We’re just focusing on the best-location, best-franchise philosophy,” he went on, and then making sure our facilities exceed the customers’ expectations.”

— George O’Brien

Autos Cover Story Sections

Awaiting the ‘Autohaus’

Michelle and Peter Wirth

Michelle and Peter Wirth

Michelle Wirth started her career with Mercedes-Benz as a mechanical engineer. Early on, after only a few visits to Stuttgart, Germany, where the cars are designed and manufactured, she learned that the company doesn’t build to industry standards — it creates an environment where engineers can design to their own, higher standards. These are lessons she and her husband, Peter, apply to their life and how they do business, especially with their new venture, Mercedes-Benz of Springfield, set to open next month.

Peter Wirth doesn’t know exactly how long it’s been since Mercedes Benz has had a presence in Western Mass. with a dealership.

He does know that it’s been … well, long enough.

As in, long enough that he knows he and his wife, Michelle, and fellow partner Rich Hesse have a lot of work to do in many different realms as they prepare to open Mercedes-Benz of Springfield on the site of the old Plantation Inn across from Mass. Turnpike exit 6 in Chicopee.

For starters, the partners in this nearly $12 million enterprise have to let people know that Mercedes is, indeed, back in the 413 more than a decade after a small dealership on Riverdale Street, this region’s auto mile, if you will, closed its doors, leaving area consumers to travel to Hartford or just east of Worcester to do business.

And they intend to get that job done in a number of ways, from intensive, targeted marketing to a grand-opening celebration (date to be determined), to some work within the community even before the doors open, to show that they are not just here to sell cars (more on that later).

But there is other work to do, and most of it falls in the category of showing just how much Mercedes-Benz — the company, the cars, and the brand — have all changed since the last time someone had the opportunity to buy or lease a new one in Western Mass.

“What I recognized is that we have to — and we love to — reacquaint people in our area of influence with the Mercedes-Benz brand; a lot has changed in 10 years,” said Michelle Wirth, who will oversee marketing efforts and other duties for the company, but started her career with Mercedes as a mechanical engineer. “There are something like 3,000 to 4,000 Mercedes cars in Western Massachusetts currently in operation. I don’t have exact figures, but I’m sure most of them are older, because people haven’t made the trek to Hartford or Shrewsbury or Albany pick up a new car.

“We want to make sure that those folks who are already convinced about the brand know we exist, and then reacquaint them with the new cars,” she went on. “The vehicles themselves have just transformed in the past 10 years.”

An architect’s rendering of the new Mercedes dealership

An architect’s rendering of the new Mercedes dealership, which will emphasize transparency.

By that, she was referring to everything from the number of models to the depth of the price range. For example, she pointed to the CLA, a Mercedes model that retails for under $33,000, a number that would likely surprise many people, including some who know cars — and Mercedes.

Other things that have changed since Mercedes models were last sold in this region include the carmaker’s focus on safety, and not merely luxury and style (although those are still points of emphasis, to be sure), as well as the dealerships in which the cars are sold and, especially, serviced.

Indeed, dealerships today are well-appointed, convenience-focused, customer-friendly facilities that exist not so much to showcase cars, although they still do that, certainly, but pamper those who buy them.

So much so that Michelle Wirth, as she described the process of designing, outfitting, and operating the facility in Chicopee, said the mindset is that she and her husband are not competing with other dealerships, necessarily, but against hotels, restaurants, and even the new $950 million MGM Springfield casino due to open in about a year, in the manner in which they are all focused on hospitality and taking care of the customer.

“When they walk away from a fine hotel establishment, people say ‘man, they did everything right’ — it’s just a feeling they have,” she explained. “When they walk away, they’re going to feel it, they’re going to feel, ‘wow, they care about me, and they took care of me. That’s the feeling we’re going to create.”

For this issue and its focus on auto sales, BusinessWest visited the dealership a few weeks before its doors are due to officially open to gain some insight into what the partners in this venture are anticipating as Mercedes makes its much anticipated return to the area.

A Major Coup

By now, most in the region’s business community are at least somewhat familiar with the story behind Mercedes-Benz of Springfield.

Back in late 2014, Peter Wirth and Hesse, owners of a Mercedes dealership in Nanuet, N.Y., were approached by the carmaker about bringing the brand back to Western Mass. with a dealership after that aforementioned lengthy absence, and after some extensive research, the two concluded that this region was, indeed, underserved, and that a facility here had considerable potential.

Especially at the site they eventually chose, two turnpike exits east of Riverdale Street, at the old Plantation Inn site. This location is literally across the street from where the tollbooth once stood, and at the eastern end of Route 291, giving the location great accessibility.

And it will be needed, because this dealership will have a huge coverage area, one that includes parts of four states: Western Mass., Northern Conn., Southern Vermont, and Southern New Hampshire.

That large swath of territory will bring some challenges, said the Wirths as they talked about their business venture — especially the large number of markets they must advertise in — but also a great deal of opportunity to better serve thousands of Mercedes customers.

“It’s a big area, and it’s a big task,” said Peter. “But it’s a huge opportunity for people in the Springfield metro area, who have to drive 45 minutes to Hartford, or almost an hour to Shrewsbury, the next-closest dealership, or an hour and a half to Albany.”

More than three years after those initial talks between Mercedes, Wirth, and Hesse began, the Western Mass. Mercedes dealership, or ‘autohaus,’ as such facilities are called in Germany, is nearly ready for prime time.

When BusinessWest toured the site in mid-August, the exterior of the dealership had been completed, and work was continuing inside. The projected opening date will be late September.

Like most of the dealerships being built, many of them replacing facilities 30 or 40 years old, this one will be spacious, well-appointed, modern-looking, and heavy on glass and metal.

There is a corporate identity and design standards for these dealerships, and they make them easily recognizable as Mercedes-Benz dealerships. There are certain kinds of columns, tiles, paint colors, and furniture that are pretty standard across the dealer network. But at the same time, we, together with Mercedes-Benz, worked on laying out the dealership in the way we know it’s going to work.”

And while the Mercedes corporation has a desired look and feel in mind that its dealers must create, there is plenty of room to personalize one’s autohaus, said Peter, citing, as just one example, the dealership’s car wash; Mercedes doesn’t require one, but the partners considered it a key part of the “experience.”

“There is a corporate identity and design standards for these dealerships, and they make them easily recognizable as Mercedes-Benz dealerships,” he explained. “There are certain kinds of columns, tiles, paint colors, and furniture that are pretty standard across the dealer network. But at the same time, we, together with Mercedes-Benz, worked on laying out the dealership in the way we know it’s going to work.

“That’s something that has now become specific to this site,” he went on. “Mercedes-Benz has ideas, but they will also take our input, and we’ve been very vocal in that process and made it our own. While we’ve been using their design cues, the feel and flow of the dealership is what we know works and will serve our customers best.”

Asked to elaborate, he said this dealership isn’t just open, it’s incredibly open.

Wirth said his office has four glass walls, and from it, he can see the front desk, the sales office, the lounge, and the service drive. In many ways, that office embodies the intended feeling of openness, ease of transition from one department another, and a word that’s becoming ever more prominent in business and politics today — transparency.

“It’s easy for customers to not just find their way around, but to transition from one department to another — we’re not compartmentalized,” he explained. “We don’t think of a dealership as a sales, service, and parts department; it’s one unit to us.”

Driving Force

As she talked about the new dealership, plans for it, and the level of service she and her partners plan to create, Michelle Wirth thought this was the time to discuss her career with Mercedes-Benz, which began soon after she graduated from Lehigh University with a mechanical engineering degree.

Peter and Michelle Wirth say much has changed in the decade since Mercedes had a presence in the area

Peter and Michelle Wirth say much has changed in the decade since Mercedes had a presence in the area, and they intend to reacquaint the region with the brand.

“I got hired right out of school and worked in environmental and safety engineering,” she told BusinessWest. “I went to Germany a number of times a year, and actually got to go to the design center in Stuttgart, where they design and build these vehicles. I got to learn — I didn’t know this when I walked in the door — that Mercedes doesn’t just build to standards. They rise above those standards, and they have a holistic approach to safety and a holistic approach to design.

“It’s more about ‘what’s the best solution for the customer,’ and that’s impressive,” she went on, “because it creates a space where engineers get to design to the best possible standard, not just the least common denominator. And that translated over to me. As a young person, eyes wide open, I learned a lot from that. It’s like a standard you set for yourself, and it’s the highest one around.”

This attitude, or mindset, permeates everything the couple does in life and in business, Michelle explained, adding that it shapes everything from how they’ll do in business in Chicopee to how they’re already getting involved in the community that will soon be home — to them and their business.

That involvement has taken the form of support for organizations ranging from Square One to Baystate Children’s Hospital, said Peter, adding that these endeavors are part of a culture the company wants to instill. In other words, rather than doing something that might be expected, such as simply meeting auto industry design and performance standards, they’re setting the bar much higher.

“It’s not just checking a box for us,” he explained. “If you can be involved with the children’s hospital, and you have four healthy children; that comes naturally to us. Yes, you’re getting your name out, but it’s also a natural contact point for us; we can help and do good at the same time.”

Meanwhile, back in the realm of car sales, the Wirths believe they have the right brand at the right time to go along with the right location and the right culture.

Indeed, while some luxury brands have struggled with making all-important connections with younger audiences, Mercedes has made inroads, if you will, by creating lower price points and getting younger people into its vehicles.

And once that happens, they often become customers for life, said Michelle, noting that Mercedes not only has one of the highest loyalty rates in the business, but one of the highest conquest rates (winning over the drivers of other brands) as well.

At the same time, the company has adjusted its marketing messages, said Michelle, to appeal not only to the young, but to those who want to think, act, and, yes, drive like the young.

“Now, the marketing focus is more on ‘young at heart,’” she explained. “That’s how we describe people; it’s ‘do you have that Millennial mindset? You may not be that age, but you have that mindset. By doing that, you broaden the audience that you’re speaking to.”

Getting in Gear

Given the huge geographic area it will be serving, Mercedes-Benz of Springfield will already be speaking to a very broad audience.

The initial message will be that Mercedes is back in Western Mass. after a decade’s hiatus. But soon — in fact, almost immediately — there will be much more to communicate: that Mercedes is back, and that this is a brand for both the young and the young at heart.

Also to be communicated, especially through a visit to the new dealership, is that this venture fully embraces that corporate culture of not merely meeting standards, but setting higher ones.

George O’Brien can be reached at [email protected]

Autos Sections

No Slowing Down

Mike Lapointe

Mike Lapointe says effective pricing and “making it easier for customers to do business” have been keys to success at Lia Honda.

Mike Lapointe said he considers himself an “outlier” in most respects when it comes to the automotive market and what’s happening within it.

He used that term in reference to everything from his ability to sell the generally older cars being traded in these days — a development he attributes to the market he serves as general manager of Lia Honda in Northampton (one with thousands of college students on tight budgets) — to the manner in which his dealership is defying what all the ‘experts’ projected as a somewhat down year for the industry.

“Our sales are up 130% as far as new-car business is concerned, so Honda is very, very happy with us,” he explained. “It was the opposite of what we expected; during the winter, we had record months, and in the summer, we ran into vacation season, and things slowed down quite a bit. But we’re maintaining above 100% of our new-car objectives.”

But while Lapointe may well be an outlier when it comes to those older used cars — many are a decade or more older and not retailable in most markets — that term doesn’t seem to apply to overall dealership performance, at least among the owners and managers we spoke with.

Indeed, while analysts were predicting that 2017 would be the year the bubble would burst in the auto industry — when a run of several successful if not record-breaking years would come to an end and the needle would starting moving in the other direction — that really hasn’t happened, at least not locally.

“We actually expected to start to see a downturn, and internally, we were trending for that,” said Carla Cosenzi, a principal with TommyCar Auto Group, which operates Country Nissan in Hadley, Country Hyundai in Northampton, and Northampton Volkswagen. “That was the rhetoric within the industry, but we’re not seeing that; we’re trending upward at all our locations this year.”

Don Pion, president of Bob Pion Buick GMC in Chicopee, the dealership started by his father, Bob, agreed.

“We’re having a very solid year — I can’t complain,” said the 40-year industry veteran. “Both Buick and GMC have good products out there right now, rates are still good, and all those things help us sell cars.”

Carla Cosenzi says TommyCar Auto Group

Carla Cosenzi says TommyCar Auto Group is seeing continued growth across all its lines, despite projections for an industry-wide downturn.

With one voice, the dealers we spoke with said the forces that were supposed to bring an end to the auto industry’s fun ride, or at least pump the brakes — and they include everything from uneasiness over the scene in Washington (and around the globe, for that matter) to the fact that many of those older cars had already been replaced — are there. But they haven’t had the expected impact.

“We read all those reports … have we hit the bubble? Are we starting to trend down? Every possible thing that could affect the business in a negative way — that’s what they’re predicting,” said Pion. “You read all that, and you think, ‘what’s going to happen?’ But we haven’t seen it. People are still coming in, and they’re still buying cars.”

For this issue and its focus on auto sales, BusinessWest talked with area dealers about what they’re seeing — or not seeing, as the case may be.

The Ride Stuff

When asked how his dealership and others in this region have fared so well when the industry was supposed to take a step back — and still might; projections for the summer were especially glum — Pion paused for a moment.

“You would need someone smarter than me to answer that,” he said eventually, adding that he’s only doing what his father said needed to be done when the industry analysts’ predictions weren’t rosy — and also when they were.

“He always said that you read all that stuff, those industry projections, and you put it away for reference,” he told BusinessWest. “But you come to work every day ready to do business.”

Indeed, while Pion and the others we spoke with said they were, and are, well aware of the predictions for a slower year, all they can do is respond to what they see out their windows, in the showrooms, and on their books.

And the numbers do not reveal a slowdown of any kind.

“We sold 150 cars in February, 140 in March, and 160 in April,” said Lapointe, adding that the average for a typical year at his dealership is about 110, and ‘150-car months,’ as he called them, are solid, to say the least.

Meanwhile, Pion said, so far this year, his Buick sales are up 24%, GMC is up 30%, and used-car sales are up 20%.

Cosenzi, meanwhile, used more words than numbers to convey pretty much the same information.

“We’ve continued to see growth. And usually, we don’t see that across all brands at the same time, but we’ve seen that this year,” she explained. “Usually, one will take off a little more than another, or one will have a new-product launch or something else that will create a little more excitement. But we’ve seen growth across all three.”

What’s driving this better-than-projected performance? There are a number of factors, said those we spoke with, ranging from effective pricing (Lapointe cited this as a key to Honda’s continued solid performance) to seemingly ample amounts of confidence on the part of consumers, to quality products — especially SUVs of all sizes and shapes.

At his Honda store, Lapointe said the keys to success are having inventory that appeals to buyers in the Five College market — again, Millennials on tight budgets — and going the extra mile, whatever that may be, to clinch a sale.

“We have to find new ways to do business,” he explained. “Other dealer groups may not take a deposit over the phone; they might force you to come into the store. Other groups might not give you a trade over the phone. Those would be outdated strategies for me. We do whatever makes it easier for the customer to do business, because the next guy won’t do that.”

As for what’s selling, while car sales have been decent, said area dealers, SUV purchases and leases continue to fuel the numbers cited earlier. Each carmaker now has such vehicles in the ‘small,’ ‘mid-size,’ and ‘large’ categories, and they all seem to be selling.

“The car market is still struggling somewhat, but the SUVs, from the smaller models right up to the full-size SUVs, are doing very well,” Pion said, citing solid numbers for models ranging from Buick’s Envision (a new product) to GMC’s Acadia (a larger model).

Cosenzi agreed, noting that the SUVs made by all three carmakers she handles are doing well, as are entry-level cars — those generally under $20,000 now — such as Hyundai’s Elantra and VW’s Jetta.

The Road Ahead

As he talked about the market moving forward, Pion said his plan, in most all respects, is to continue following his father’s advice.

That would be to read and listen to the analysts’ projections, put them away for reference, but show up to work ready to sell cars.

Thus far this year, dealers have been selling more than the forecasts said they would. And they believe the conditions are such that things will continue in this vein.

This won’t make them outliers, necessarily, but it will make them quite happy.

George O’Brien can be reached at [email protected]

Autos Sections

A High-revving Engine

Carla Cosenzi

Carla Cosenzi says sales have been on the rise for several years at TommyCar Auto Group, and she expects this trend to continue at its dealerships.

Initial national projections for 2017 called for the recent rise in auto sales to level off and then perhaps slow down. But those forecasts have been adjusted recently. Indeed, the experts say a host of favorable factors, from low gas prices to a stable economy to the advanced age of many cars on the road, will continue to fuel increases in sales volume.

John Kupec III has been in the automobile-sales industry for 40 years. But he has never seen trade-ins with as many miles as the ones being brought to Gale Toyota in Enfield today.

“We’re seeing cars come in with more than 250,000 miles,” the general sales manager told BusinessWest.

Indeed, a poll conducted last month by market research company IHS Markit shows the average age of light vehicles on the road is 11.5 years, and the trend Kupec observed is mirrored at other dealerships.

“This week alone, I saw trade-ins with 160,000 miles, 180,000 miles, and 240,000 miles — vehicles last longer than they used to, but people have taken it to the extreme,” said John Lewis, general manager at Chrysler Jeep Dodge Ram and Bertera Fiat and Collision Center in West Springfield, as he spoke about reasons that led so many people to keep their vehicles for a decade or more.

John Kupec

John Kupec is optimistic about the year ahead, and says Gale Toyota of Enfield hopes to increase sales by 10% to 15%.

The practice began in 2008 when the economy crashed. Consumer confidence plummeted, 401(k) plans lost their value, and people worried about job security and began to realize they could drive their vehicles much longer than they had believed possible without incurring a lot of repairs.

“Today alone, we took in a 2001 with 160,000 miles and a 2005 with 155,000 miles,” said Craig Dodenstein, sales manager for Toyota of Greenfield, who noted that people usually upgrade to a new vehicle when the cost of repairs becomes prohibitive.

Sales began to rise a few years ago in line with a renewed confidence in the economy that has slowly taken root. But last fall, the National Automobile Dealers Assoc. predicted 2017 would be the year in which sales would reach their peak and begin to slow down. That projection was changed, however; now, sales of new vehicles in the U.S. are expected to remain above 17 million for the third straight year in a row, and even rise slightly toward the second half of the year.


Chart of area Auto Dealers


Aging vehicles still on the road have resulted in pent-up demand, and that factor, coupled with new models, aggressive manufacturer incentives, low interest rates, reasonable gas prices, and an upswing in the economy, are fueling optimism at local dealerships for the coming year.

“Last month, our sales were up 10% over January of last year, and we expect a 20% increase in 2017,” Lewis said, attributing the number not only to the company’s reputation and the service it offers, but the fact that Subaru sales have climbed and a new $5 million Chrysler Jeep Dodge dealership is under construction, which hindered sales last year when they started working from trailers.

Fathers & Sons in West Springfield also has a new dealership, an $18 million facility that is home to Audi and Volkswagen franchises.

“We want to grow, plan to grow, and have the tools in our arsenal to do it,” said Sales Manager Ethan Prentiss. “In December, Volkswagen had the best month in company history, and this year we expect a 10% to 12% increase in Volkswagen and Audi sales, and an 8% to 10% increase in Volvo sales,” he said, referring to the company’s other dealership on Memorial Avenue, which houses the largest dedicated Volvo dealership in the country in terms of square footage.

Ethan Prentiss

Ethan Prentiss says the demand for SUVs and crossovers such as the new Volkswagen Touareg continue to rise at Fathers & Sons Volkswagen.

Incentives are also boosting sales, and Kupec said Toyota’s are higher than they have been in decades. “The manufacturer is offering 0% interest on some models, which they have never done before; hefty rebates of $2,000 to $3,000; and bonus cash on leases,” he said. “We’re off to a great start and hope to have a 10 to 15% increase this year in sales.”

Bill Peffer concurred. “It’s a very exciting industry to be in, and our outlook for 2017 is very, very positive,” said the president and chief operating officer of Balise Motor Sales, which has 24 stores in three states. “The market is very strong, and any volatility has been offset by manufacturer incentives. There are tons of new choices for customers — it’s a very good time to buy a car, truck, or SUV.”

For this issue and its focus on auto sales, BusinessWest looks at the current landscape within the industry and what the road ahead might bring.

Getting into High Gear

Last June, Volkswagen agreed to buy back its 2.0L diesel vehicles after a lawsuit that proved it had used emissions-system-defeating software. The VW Group also agreed to pay owners $5,100 to $10,000 in additional compensation on top of a fix or buyback of their car.

The negative press that ensued made sales challenging for a period of time, but buybacks began last October and accounted for a quarter of the Volkswagen sales at Fathers & Sons in December.

“These people would normally not be in the market for a new car, and the projection is that we will be able to retain 25% of them; many of our customers love the way their Volkswagens drive and handle,” Prentiss said, explaining that this situation, coupled with the new dealership and a lineup of exciting new products, is not the only reason for the projected increase in sales.

“We are now a negotiation-free dealership, which is what customers want,” he continued. “Buying a vehicle here has become all about the experience. Our salespeople are non-commissioned, and customers can find what they are looking for and complete the purchase within two hours.

“We give them our best price up front and make it fun to buy a car,” he continued, adding that Volvo sales are also up, as the manufacturer broke records last year due to the launch of a new image and the release of new products.

Toyota of Greenfield is another dealership that has undergone change. It moved into a new, $7 million dealership last winter and held a grand opening last May, so 2016 was a year of transition as they were able to move out of the trailers they worked in during 2015 while construction was underway.

“We’re looking for a 5% to 10% increase in sales this year, and if January was any indication, we are headed in the right direction,” said Dodenstein, adding that January sales had almost tripled over last year’s numbers by the third week of the month.

Although the new dealership certainly makes a difference, manufacturer incentives and new products add to the enticements. The new electric Prius Prime is a leader in its class; it gets 133 miles per gallon, beat a preliminary 22-mile electric volt range estimate with 25 miles, and gets 54 mpg in hybrid mode.

Meanwhile, Carla Cosenzi said last year was a great one for TommyCar Auto Group, which includes Hyundai, Nissan, Buick, GMC, and Volkswagen franchises. Some stores did especially well, including Hyundai, which experienced strong demand for entry-level vehicles.

“Hyundai gives customers a lot of value for their dollar, including technology, safety, and the aggressive pricing people are looking for,” Cosenzi explained, noting that consumers are excited about the fact that new technology is standard in many brands of entry-level models and ranges from adaptive cruise control to lane assist, collision warning, and backup cameras.

TommyCar is expecting another excellent year, and the sales of the new Volkswagen Golf All Trac station wagon, which has all-wheel drive, accelerated right after it was released. In addition, SUVs and crossovers are becoming increasingly popular, such as the 2017 seven- passenger Nissan Rogue and Volkswagen Tiguan.

“People want the space, comfort, and luxury they provide. They are more expensive than compact cars, but with interest rates and gas at all-time lows. they’re affordable,” Cosenzi noted.

Other local dealers agree that the demand for trucks, crossover vehicles, and SUVs is growing. They point to the fact that unemployment rates are low, people use trucks to do business, and buyers of all ages want to be able to travel in the winter.

“The weather in New England is unpredictable, and people want mobility whether they are driving to the ski slope or have the kids in their vehicle during a snowstorm,” Peffer said, adding that today’s crossovers and SUVs offer that versatility.

He noted the trend has changed over the past few decades. “Station wagons were popular from the ’40s through the ’70s. But when Chrysler came out with a minivan in the ’80s, the evolution of SUVs began, and so did the way people chose to be mobile,” he told BusinessWest, noting that crossovers and SUVs are affordable, offer more utility than mid-sized cars, and get good gas mileage.

Prentiss said Fathers & Sons sells seven-seat vehicles as quickly as they get them, and Audi’s Q7 and Volvo’s XC90 SUV models are popular because they offer utility plus plenty of cargo space. In addition, Volkswagen’s Tiguan and Golf All Trac have made the brand competitive with Honda and Toyota.

Changing Landscape

Local dealers say leasing has increased and accounts for a good portion of their new-car transactions.

“Leasing allows people to move into cars with low payments without the hassle of long-term maintenance; they can lease them to drive what they want and turn in the car before the warranty is up, as opposed to incurring costs over a six-year loan period,” said Peffer, noting that, a decade or two ago, leasing was reserved for commercial buyers, but today it has gone mainstream, and a third or more of Balise’s new-vehicle sales are leases.

Leasing is also popular at Bertera and accounts for 38% of its new-car business. “Technology is moving so fast, and people want the latest advances. Plus, a segment of the population is always going to have a payment, and they can get a brand-new car every two to three years with a lease,” Lewis said.

He explained that the average payment on a purchased $40,000 vehicle is $500 a month for six years, but the same vehicle can be leased for $300 to $350 a month with very little money down, which makes it attractive.

Kupec noted that the appeal extends to different age and economic groups, especially since people who do a lot of driving can build additional miles into a lease.

“People are more receptive to leasing than ever before,” he said, adding that 40% of the store’s new-car transactions are leases.

Prentiss told BusinessWest that a large portion of Millennials would rather lease than buy a new vehicle. “It has to do with their psychology; they think a three-year lease is long enough.”

The market for electric vehicles is also growing. Cosenzi said the Hyundai Ioniq, which is scheduled to come out in the next month, will have a battery-only model with an electric driving range of 124 miles and an EPA rating of 136 miles per gallon.

Positive Signs

From a big-picture, national-economy perspective, the road ahead is certainly marked by unpredictability and guarded optimism.

In the auto industry, through, there would appear to be fewer potential bumps in that road and apparently smooth riding. As noted by all those we spoke with, a number of factors are contributing to greater confidence on the part of consumers, and this is translating into greater activity at area dealerships.

As they say in this business, there is plenty of tread left on those tires.

Autos Sections

Supply and Demand

Jennifer Cernak

Jennifer Cernak says technology and connectivity features often appeal to younger buyers.

With the Millennial generation quickly becoming a more powerful force in the economy — totaling around 85 million, they’re now in their 20s and 30s, and their spending clout is only growing — auto dealers have definitely taken notice.

“They’re becoming more influential in the purchase of durable goods, including vehicles,” said Bill Peffer, president and chief operating officer of Balise Motor Sales. “They’re buying for themselves as they get older, but many are still living with their parents, so they’re also influencing their parents’ decisions. That’s quite a reversal from the Baby Boomers, who wanted to break free of the Greatest Generation and develop their own tastes.”

One way Millennials are changing the car-buying process is in their reliance on technology, specifically the online experience of car shopping.

According to Automotive News, more than 90% of car shoppers begin the journey online, visiting an average of 18 sites, including Google, online shopping networks, and social media, before showing up at a dealership, usually unannounced. However, Millennials take this process further, visiting an average of 25 sites before buying a vehicle.

“They definitely use technology to find what they need before they come into the store,” Peffer said. “Not too many years ago, the average consumer visited four or five stores. Now, with the explosion of technology and social media and the Internet, they’re making visits to far fewer stores before they actually make their purchase.”

Most Millennials don’t like to negotiate. They have information; they know what the cost is. They do their negotiating online.”

The average, actually, is fewer than two, he said. “They go to one store, and if the experience isn’t pleasant, if it’s not to their satisfaction, they go to the next one. Particularly with Millennials, they know what they want; the question is, are you able to meet their needs? You have to arrive at a mutually acceptable price and respect the convenience of when they want to make the purchase.”

J.D. Power reports that Millennials — usually defined as the generation born between 1980 and 1998 — bought 4 million cars and trucks in 2015, their share of the new-car market jumping to 28% — a number expected to rise steadily each year, with some estimates having them accounting for 75% of all purchases by 2025. So dealers need to understand their habits and preferences.

“I think it forces everyone to be on their game. It forces dealers to adopt — and not only adopt, but utilize — technology to fulfill the dealer’s end of the process,” Peffer said. “This is how shopping has evolved, not just for vehicles, but for everything. You can shop from your house for a suit at 10 o’clock at night.”

As for car shopping, he continued, “the deal has to be completed in the store, but we can make it convenient as well. We can deliver the car to the house for a test drive. We help the consumers make the decision where and when they want to.”

It’s all about meeting demand — for a generation of car buyers that can be well, demanding.

What’s New?

Jennifer Cernak, co-owner of Cernak Buick in Easthampton, understands the demands placed on a dealership by a prepared shopper.

“Most customers have already spotted the car they want; they’ve seen it online, and they know what they’re looking for,” she said.

Young people tend to appreciate technology, she said, from smartphone apps that connect a smartphone’s navigation feature to the vehicle, and infotainment apps like Pandora, Apple CarPlay, and Android Auto.

“There’s definitely some cutting-edge technology,” she said. “People don’t always think of that when they think of Buick; they don’t realize we have some of the latest and greatest technology and features out there.”

Bill Peffer

Bill Peffer says young, Internet-savvy shoppers, armed with data before they arrive at the dealership, are changing the car-buying game.

While Millennials certainly appreciate infotainment and connectivity packages — features that make the car a sort of platform for all one’s personal tech — that’s only one part of what they’re looking for in a car, Peffer said.

The second big draw is safety features — everything from lane-departure sensors and active braking systems to multiple airbags and safety shields: in other words, components that both help avoid crashes and protect riders in the case of one.

The third attraction is, quite simply, value, a concept that goes beyond the bottom-line price, encompassing everything from how well a vehicle holds its resale value to how it will serve their lifestyle and needs. That explains the popularity of compact SUVs, or crossovers, because they tend to support the activities of families and outdoor enthusiasts at a more reasonable price than larger SUVs.

Cernak noted that the Buick Encore compact SUV has broad, cross-generational appeal, and that includes Millennials, who appreciate features like all-wheel drive, Bluetooth connectivity, in-car wi-fi, backup cameras, and being able to start the car from their phone — a mix of traditional and thoroughly modern amenities. “The younger generation seems to like these things — not that the older generation doesn’t like them too. But older buyers are looking for a more traditional luxury experience.”

She also said young buyers are increasingly leasing, but that’s true across the generations. “More and more people are leasing. If someone likes to get in a brand-new car every few years, it can be more affordable. Some people just want to keep up with the latest and greatest.”

Peffer likewise doesn’t see much difference in the popularity of leasing between the generations, but noted that, as a whole, the New England region leads the country, along with the West Coast, in the percentage of car shoppers who choose that option. “I don’t see that waning. No matter what the generation, it’s a great option.”

Jeff Sarat, president of Sarat Ford Lincoln in Agawam, said he sees plenty of crossover in what vehicles and elements of the car-buying experience appeal to the different generations, though he noted that some of the company’s outreach, particularly search-engine marketing, is created with younger, more tech-savvy consumers in mind.

One big difference, however, is the loyalty factor. Baby Boomers were far more likely to develop brand and even dealer loyalty and return for new product every few years for decades. Millennials, Sarat said, are less likely to forge those bonds, and are much more willing to switch models, brands, and dealerships if they see more value elsewhere.

“Millennials are apt to jump around a little bit, meaning they might go with a Volkswagen this time and then next time try a Ford,” Sarat said. “Maybe their friend recommended a car they thought was phenomenal, so they try that. They’re more likely to switch around, and they don’t have set buying habits, so you really have to work to make them a customer for life. We try to do that with everyone, of course, but with Millennials, if you don’t stay in contact with them, they’re more likely to move around.”

Unfounded Fears

According to Business Insider, there was some concern in the auto-sales industry about how enthusiastic the growing Millennial generation would be; among the questions were whether they’d reject SUVs and whether they would gravitate toward mass transit. But those fears proved unfounded, as young professionals and families were a key factor in the industry’s surge to its current sales pace, which has topped 17 million for two straight years, with the same expected in 2017.

Yes, Millennials are demanding, and their penchant for Internet research doesn’t make things easier on auto dealers, but it’s not a negative, Peffer said; it just means dealers have to know as much as buyers do, and be ready to clearly explain subtle differences in pricing and features, skills they should already have.

“Most Millennials don’t like to negotiate. They have information; they know what the cost is. They do their negotiating online. They come in knowing exactly what they want to pay,” he told BusinessWest. “This is how shopping has evolved in the overall economy. The question is, are you able to meet their needs?”

Joseph Bednar can be reached at [email protected]

Autos Sections

Waiting to Leave

Carla Cosenzi

Carla Cosenzi says her newest dealership was designed to give the customer a positive experience and not waste their time.

There’s no one way to design an auto dealership, but increasingly — driven by both manufacturer requirements and an ever-more-demanding clientele — newer stores boast a number of specific features, from spacious, drive-in service departments to comfortable, well-stocked lounges; from energy-efficient touches to an emphasis on openness and transparency in the showroom. At a time of fierce competition for business, dealers say these elements are necessary to attract buyers — and keep them coming back.

Gary Rome summed up the experience of most of his customers succinctly and bluntly.

“When people are waiting for a car, they’re waiting to leave,” said the president of Gary Rome Hyundai. And that goes for both people in the market for a vehicle purchase and those bringing their rides in for service — in either case, no one wants to spend any more time at a car dealership than they have to.

On the other hand, sometimes it takes a while to, well, leave. Which is why so many aspects of his new facility on Whiting Farms Road in Holyoke, which opened last month, are designed to keep customers occupied and … let’s just say in less of a hurry to go home.

“One of the most important things to customers is time,” Rome told BusinessWest. “If you value their time and make it easy to purchase a car or have their car serviced, you’ll get loyal, repeat customers. So I want to make the process as enjoyable as possible by offering all the amenities I think are reasonable for our customers.”

Gary Rome car dealer

Gary Rome says energy-efficient touches throughout his new dealership are aimed squarely at reducing his carbon footprint.

To that end, the customer lounges — there’s one for watching TV, another for quietly doing business, and a play area for kids — border a coffee bar with free coffee, fruit, and muffins, as well as vending machines loaded with healthy snacks. Beside the TV is a screen detailing the status of every repair job currently underway, and the lounges overlook the service department so people can watch their cars being worked on.

Northampton Volkswagen and Country Hyundai, two neighboring stores in TommyCar Auto Group, opened their doors in 2014 with a similar focus on the customer experience. People bringing their cars in for service are met with high-speed doors followed by a porter who shows the way to a waiting room decked out with a TV, wi-fi, business workstations, smartphone jacks, free drinks and snacks, and even complimentary bicycles outside in case customers would rather take to the nearby bike trails instead of waiting indoors.

“We designed everything for the comfort and convenience of the customer,” said Carla Cosenzi, president of TommyCar. “We’re doing everything with the customer in mind.”

To that end, the facility has improved the employee experience as well, incorporating air conditioning, high ceilings, large windows, and LED lights in the service department — a far cry from the hot, cramped workspaces of old. Productivity has soared under those conditions, she said, which means, yes, less waiting for customers.

“They’re set up for efficiency, so they can be more productive and make the best use of customers’ time while they’re here. That’s where the majority of our focus was while building this.”


See: Area Auto Dealers in Western Mass.


Damon Cartelli agreed that efficiency, as it impacts the customer experience, is paramount — and a major design trend in the auto industry. His company, Fathers & Sons, opens its new, connected Audi and Volkswagen dealerships this week on Memorial Avenue in West Springfield, which boast the same type of high-speed doors — which trap air inside, keeping the space cool during warm days and warm during cold ones — that Cozensi spoke of. The driver then parks, gets out of the car, and walks directly into the shop, where a lounge with a TV area and workstations awaits.

“That’s now standard across the industry,” said Cartelli, the company’s president. “New dealerships have an area that’s comfortable and quiet so you’re able to work or sit in a lounge and have coffee and watch TV.”

While comfortable lounges and drive-in service bays may be among the more obvious hallmarks of the modern auto dealership, other trends — from a focus on transparency in the sales area to environmentally friendly features — are surging as well. For this issue’s focus on auto sales, BusinessWest explores three dealerships, two of them brand new, to talk about what dealers are doing to move customers out quickly — and get them to return, time and again.

No Secrets

Cartelli noted that many features of a new dealership — particularly Volkswagen, which demands uniformity in new dealerships with their nameplate — are blueprinted by the manufacturer, and many of the touches, including the high-speed doors, the finished service driveway (as opposed to a concrete look), the high-tech customer lounges, and display areas where customers can buy clothing, branded items, and vehicle accessories are required elements.

Damon Cartelli car dealer

Damon Cartelli says the prominent use of glass inside and outside his Volkswagen and Audi dealerships promote transparency, in both design and customer dealings.

So is the transparency. To look around the showroom is to see office walls of glass, so sales associates and managers are never hiding from customers. Cartelli said the look reflects his own philosophy of doing business in a transparent way.

“We have a transparent pricing model. We’re transparent with everything we do, with how you buy a car. We don’t want customers asking, ‘what is he doing back there?’ You can see what he’s doing. We have nothing to hide. That’s part and parcel with how we do business, which is nice.”

Cosenzi had to deal with the same demands from VW, although Hyundai was more flexible in its requirements. But she agreed with Cartelli that openness is a positive for customers.

“Sales managers are no longer in big podium stations; they’re approachable, in the middle of the showroom, and all the salespeople work in an open environment at their desks,” she said. “As you walk through the dealership, you see the open sales stations, the glass. When you’re in the finance office, you constantly see and follow what’s happening with paperwork and flow.

“We worked really hard to make the customer experience great,” she went on. “You see a lot of light when you walk in, and you’re immediately greeted by a warm, friendly body at the greeter station. We made sure all the customer parking was up front, made it really easy for them. We want customers to feel like they’re getting the VIP treatment all the way around.”

Cartelli said the best way to make customers feel important, quite simply, is to not waste their time. “If you can increase efficiency in how you do business, that’s important — the speed with which business gets done is second only to price. People want a fantastic customer experience, and they want to know how quickly you’ll get it done.”

Rome incorporated elements of transparency in his new dealership as well. “It’s important for me that customers come inside the building and are able to watch their cars being worked on,” he said, pointing out the line of sight between customer lounge areas and the spacious service department. “Some dealerships take the car around back to some black hole, and you don’t know what thery’re doing or when it will be ready. This is a much better experience.”

In this day and age, customers expect this treatment. If you don’t have it, there are other dealerships out there that do, and you’ll be missing out.”

But Rome also wanted a dealership that’s cutting-edge in environmental ways as well, incorporating a number of green elements aimed squarely at reducing the store’s carbon footprint, from energy-efficient LED lights to insulated windows to a car wash that reclaims and recycles water. All the oil collected during oil changes isn’t discarded, but rather stored in drums and pumped back into the heating system and used to heat the service department, while oversized fans circulate air in that area and control temperature. He even installed electric car-charging stations on the premises that anyone — not just customers — can stop by and use.

“Simple things like automatic faucets and toilets, motion-sensing lighting in the offices, reduces our carbon footprint,” he said. “In addition to that, we’re putting a 650-megawatt solar array on the back of the property. We’ll be generating energy.”

Lots of Options

There’s one other feature the new dealerships share: more space.

“The main feature is being able to display every model Hyundai makes,” Rome said, noting that the new showroom holds 15 cars, an outdoor canopy houses eight more, and the vast property contains hundreds more vehicles than could have been displayed at the former location on Main Street.

Cartelli’s new property is designed to handle 200% growth. “We’re in growth mode, and we have the ability to grow into it,” he said. “We’ve overbuilt for today’s business, so we can overserve the customer.”

That service begins right away when a driver enters the wide indoor bay and a device instantly tests the vehicle for alignment — a feature at the other new dealerships as well. Once out of the car, customers notice the tiled floors, which are slip-resistant and easier on the feet than cement.

In short, everything is geared to giving customers an enjoyable experience while they wait to leave. At Gary Rome, people leaving with a new car are able to fill out their paperwork in a glass-walled business office looking out over a covered area where their new car sits beside a red carpet. From the moment they walk in, he said — his rule is that associates greet any customer within 10 feet of them on the showroom floor — to that roll outside on the red carpet, everything is designed with the customer in mind.

Cosenzi said such touches are more important now than ever.

“In this day and age, customers expect this treatment,” she told BusinessWest. “If you don’t have it, there are other dealerships out there that do, and you’ll be missing out.”

Joseph Bednar can be reached at [email protected]

Autos Sections

Groundbreaking Event

As they took to the podium placed near the front door of the hotel known long ago as the Schine Inn (it’s had many names since), several politicians reflected on the important place the site has had in Chicopee’s history, especially its political and business history. And they noted that this legacy will certainly continue as the site is prepared for its new life — as home to a Mercedes dealership to be operated by Springfield Automotive Partners. Ground was broken for the ambitious, $12 million project on Sept. 21. The dealership, highly visible from the exit 6 tollbooth of the Mass Pike just a few hundred yards away, is due to open in just under a year, said Peter Wirth, managing partner of Springfield Automotive partners, who is undertaking the project with his wife, Michelle, and partners Rich and Amy Hess.

An architect’s rendering of the 37,000-square-foot Mercedes dealership

An architect’s rendering of the 37,000-square-foot Mercedes dealership

A large group of officials take up shovels for the groundbreaking

A large group of officials take up shovels for the groundbreaking

Managing Partner Peter Wirth

Managing Partner Peter Wirth addresses the large gathering for the ceremonies