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Toyota of N. Hollywood Expands

Toyota of N. Hollywood Expands By SHELLY GARCIA Senior Reporter Toyota of North Hollywood is set to begin a $4 million expansion that will net the dealership a brand new showroom and an expected 14-percent increase in monthly car sales. The dealership, touted as the No. 1 Toyota retailer in Los Angeles, has torn down its old showroom to make way for a new 56,000-square-foot facility that will house 250 cars on two levels along with expanded office and administrative space. “Right now, I’ve got 500 cars parked at storage lots all over the place,” said Chris Ashworth, vice president and general manager of the Lankershim Boulevard dealership. In addition to more display space, the new showroom will include enlarged office areas right now some 35 Toyota of North Hollywood salespeople share about 30 tightly situated desks a new customer lounge and a new conference room. Additional service bays will be constructed behind the showroom, bringing the dealership’s total number of service bays to 38. The expansion is the second for Toyota of North Hollywood since mid-1998, when the dealership acquired the adjoining piece of property on which the new showroom will be built to accommodate what was then a fledgling business in sports utility vehicle and mini-van sales. That business has since mushroomed, contributing to overall monthly unit sales of 400 new cars and 300 used and certified (pre-owned vehicles sold with a warranty) cars. The company’s showroom facilities, first constructed in 1942 and expanded piecemeal through the years, have not kept pace with that growth. “When I came here in 1985, we were selling 120 new cars and 60 used cars,” Ashworth said. With the expanded parking and showroom facilities, the dealership is expected to bump its monthly sales by 75 new cars and 25 certified cars. “If I can’t stock more cars, I can’t meet customer demand,” Ashworth said. “The new space is going to make the sales process a lot more efficient and provide a better choice of vehicles on one lot.” Rather than the slowdown in car sales anticipated after Sept. 11, Toyota of North Hollywood saw sales jump by 25 percent for the final quarter of 2001, compared to the fourth quarter of 2000. Some of that increase was fueled by zero-percent financing incentives offered by most manufacturers, including Toyota. Those incentives have largely been withdrawn since January but, hoping to maintain the momentum of the last quarter, Toyota of North Hollywood has continued to offer the program by paying the difference between Toyota’s finance company rates for qualifying customers. “It costs us quite a bit of money to buy down the interest rate,” Ashworth said. “It’s hurt margins, but we’re still selling more cars.” Others point out that it is not uncommon for larger dealerships to do what Toyota of North Hollywood is doing. “They like to sell cars,” said Chris Denove, a partner with J.D. Power and Associates, a consultancy in Agoura Hills. “It is that simple.” For dealers like Toyota of North Hollywood, who rely not only on local customers but on traffic from outlying regions, these incentives can be crucial. “What they’re doing here is capitalizing on the manufacturers’ success of zero percent and advertising it so that they can offer something that no other dealer is advertising,” Denove said. At the same time, a larger retailer like Toyota of North Hollywood can lessen the toll on margins by spreading their fixed costs across a larger volume base, Denove added. January and February are typically the slowest selling months of the year for dealers, but car sales in the first two months of 2002 have risen over last year. Nationwide, Toyota sold 109,257 vehicles in January of this year and 109,457 cars in February, compared to 102,497 cars in January and 108,757 in February of 2001, according to J.D. Power & Associates. Industry-wide, carmakers sold 1,111,337 cars in January, and 1,307,594 in February of this year, compared to 1,169,872 cars in January and 1,355,590 cars in February of 2001, the Power data revealed. Given the success of the incentives, Ashworth said he has not yet determined how long he will keep the promotion going. “I’m playing it by ear,” Ashworth said. “But right now I do not see taking it away. If it’s bringing in customers, that’s great. I’m just happy to see more traffic.”

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