With the recession fading in the rear-view mirror and sales zooming ahead, auto dealers in the San Fernando Valley region have invested in remodeling their lots. More than a half-dozen Valley-area dealers, including several on the Business Journal’s list of dealerships, have spent millions in upgrading their facilities and enhancing the customer experience, some even building facilities from the ground up. “Dealers are working very hard to improve that trust with customers and to build an environment where customers feel good about being in the dealership,” said Larry Dominique, vice president at car-shopping website TrueCar Inc. in Santa Monica. “Certain brands, especially luxury brands, are starting to require very special customer amenities (such as) luxury furniture and coffee shops. I’ve even heard of dealers providing masseurs while customers wait for cars to be serviced and dealerships with little museums in them.” Northridge Toyota recently completed construction of its new three-level, 75,000-square-foot facility at 19550 Nordhoff St. Northridge ranked No. 14 on the Business Journal’s list of auto dealers with revenue last year of nearly $90 million. The dealership’s redesign was completed in June and features a showroom and service area nearly 50 percent larger than its old facility. As new-car sales increase and millennials begin to infiltrate the market, manufacturers are reshaping their brands to fit a new customer demographic, often requiring and incentivizing dealerships to upgrade their facilities as part of that push. “It is absolutely incentivized. The main reason that brands work with dealers to upgrade their facilities that you’ll typically see is when a brand thinks it needs to reinvent itself,” said TrueCar’s Dominique. “There is no set prescription, but I’ve seen as high as 50 to 60 percent of the costs covered by the manufacturer.” ‘Easy, simple’ In July Mercedes Benz of Valencia completed a $6 million renovation of its showroom. The dealer last year temporarily shuttered its existing facility and tore down the old showroom, which hadn’t been renovated since 2006. “After (nearly) 10 years of the same facility we kind of outgrew it. There were some aspects of the old facility that didn’t fit our business model so we made the investment to upgrade the clients’ experience,” said Jason Kasova, general manager. While construction was underway, the dealer moved its showroom to a temporary building on the other side of the property and operated out of a handful of trailers. Kasova said the experience was without a doubt extremely challenging and difficult, but it has paid off, with sales increasing since the upgraded facility opened in July. The facelift included a 6,500-square-foot showroom expansion that allows the dealer to show off more of its latest models. New customer amenities include a lounge area and a café that serves complimentary coffee, tea and light snacks. “Not only did things get better from a sales standpoint, but customer experience was the driving force. People feel like they are building a relationship with the dealer,” Kasova said. “Our job is to make sure that the entire experience from the time they buy the car to the time they trade it in is easy, simple and fantastic.” Near-record growth TrueCar projects 17.2 million new cars will be purchased this year, up 4 percent from last year’s 16.5 million. If that projection holds, it would represent six consecutive years of new-car sales growth – a trend the industry hasn’t experienced since the 1920s. And Dominique says that by 2016 new-car sales could surpass the 2005 prerecession record of 17.5 million units sold. “Coming out of the recession in 2009 and 2010, there has actually been fairly slow and steady growth getting us back to the 16 million level,” he said. “Consumer confidence is up and job creation is up.” Industry analysts note that car sales are increasing among millennials, who are turning away from cycling and other forms of transportation as their careers advance and families grow. Chris Sutton, vice president of U.S. automotive retail at J.D. Power in Westlake Village, said this next generation of car buyers makes up about 25 percent of the new-car market. “Millennials are the leading group (in car sales) and that will continue to rise,” he said. “They are now influencing manufacturers’ expectations.” Most manufacturers now require dealers to offer amenities – including lounges, flat-screen televisions and electrical portals and Wi-Fi to accommodate customers’ wireless devices – to heighten the buying experience. More often than not, children’s nurseries are provided as well. That’s the case at Lexus of Thousand Oaks, which is in the process of building a three-story facility at 3735 Auto Mall Drive, not far from its existing location. The 150,000-square-foot facility will house a 12-car showroom, 50 new service bays and a luxury customer waiting area with a bistro. Much of the décor and amenities were designed with millennials in mind. “There seemed to be this idea that millennials don’t want to buy cars, but that’s not true,” said General Manager Kenneth Greene. “They actually want to buy the right car.” Greene expects the new facility, which is valued at north of $20 million, to be ready by June. After that, the company will renovate its existing location to accommodate a Land Rover dealership.
