At Car Lots, the Best Deal May Be the Real Estate
The redevelopment projects are popping up across the nation.
In Durham, N.C., Hines plans to break ground on the former University Ford lot this year, looking to expand the American Tobacco Campus, a redeveloped factory complex with retail, restaurants and events spaces.
The Price Simms Family Dealerships, which owns 14 locations in Silicon Valley and Northern California, plans to transform its Toyota franchise in Walnut Creek into a multistory showroom and residential project, with a smaller dealership occupying the ground floors of the project. The value of the business is being overtaken by the underlying value of the real estate, said Adam Simms, the company’s chief executive.
And two development firms in Wilmington, N.C., aim to turn an auto dealership next to a defunct Kmart into 298 apartments and stores in a complex called Paseo. “It was such a nasty eyesore,” said Mariana D. Molina, president and founder of Bella Vista Development, one of the firms on the project. “It’s a really car-centric community, and this is just a sea of parking.”
The roughly 18,000 new-car dealerships in the United States operate in a state of flux, according to industry experts. A rising interest in electric vehicles and increased online shopping, among other significant shifts, point to a future where these businesses offer different shopping experiences.
Stereotypical visions of endless rows of cars festooned with colorful plastic flags and inflatable sky dancers nodding in the breeze will give way to a smaller footprint for sales and more room for maintenance and electric vehicle charging infrastructure, said Inga Maurer, a senior partner and auto expert at McKinsey & Company. Electric cars will not need oil changes or powertrains replaced, but the increasing amount of sensors and electronics in them will still require visits to mechanics.
Despite these shifts, 75 percent of customers still view the test drive and on-site experience as a core part of their buying journey, Ms. Maurer said. And the franchise model for car sales means that even if consumers begin shopping online, they need to finish the transaction with the dealer.