Brucelee
12-18-2007, 15:03
:) Dealerships Offer Manicures,
Coffee Bars, Massage Chairs
To Draw Super-Rich Customers
By NEAL E. BOUDETTE
December 18, 2007; Page B1
West Palm Beach, Fla.
For many people, a trip to the auto dealer means a mind-numbing hour or two in a plastic chair with some tattered magazines and stale coffee.
But some major auto retailers are starting to change that, at least for buyers and owners of luxury vehicles. In the past year or so, several dealership chains have begun giving their luxury-car showrooms multimillion-dollar makeovers. The goal is to create the look and feel of five-star hotels for customers, increase the dealerships' car allocations and even make it less likely that rival dealerships will pop up nearby.
Lexus of Palm Beach recently opened a luxury showroom featuring a water wall, back center.
Just last month, AutoNation Inc., the country's largest chain of auto dealerships, opened a gleaming glass-and-stone Lexus store in this wealthy enclave north of Miami. The sales floor is made of polished porcelain tile, and the walls and counters are accented with cherry and bird's-eye maple veneer.
"Guests," as Lexus calls its customers, leave their cars with a valet and are then guided by a personal concierge to a European-style coffee bar offering complimentary espresso, cappuccino and a selection of pastries prepared by a chef trained in Rome. "We have customers checking into world-class hotels, they shop on Fifth Avenue and they expect a certain kind of experience," says Mike Jackson, AutoNation's chief executive.
Newport Lexus, a store owned by Wilson Automotive Group in Newport Beach, Calif., opened a year ago. There, customers can work on their putting game on a seven-hole green. Across the street, a huge Mercedes-Benz showroom owned by the closely held Fletcher Jones Management Group offers free shoeshines, manicures and shuttles to the airport. Last summer, Herb Chambers Lexus in Sharon, Mass., part of the Herb Chambers Cos. dealership chain, moved into a new building with a fireplace lounge, soaring skylight and spiral staircase.
More are on the way, too. Over the next year, AutoNation will open a new Mercedes store in Delray Beach, Fla., and redo BMW stores in Dallas; Tucson, Ariz.; and Las Vegas; and Mercedes stores in Miami and Sarasota, Fla.
The rise of super-luxury dealerships reflects the country's growing ranks of wealthy individuals and the ways companies are trying to cater to them. At hotels, for example, five stars are now nearly passé, with more and more six- and seven-star properties cropping up around the world.
The new auto showrooms also show the change in luxury auto dealerships from 20 years ago. Lexus, which was launched by Toyota Motor Corp. in 1989, was once alone in offering loaner cars to customers who brought vehicles in for service, says Vince Liuzzi, general manager of Herb Chambers Lexus. Now many do that. "You've got to do a lot more to wow people now," he says.
The Newport Lexus dealership in California features a putting green to draw customers.
AutoNation and other dealership groups are also betting there is big money in building luxury showrooms. The Lexus of Palm Beach dealership moved from a much smaller, older facility a few miles away to a building that cost $35 million to construct, about four times what dealers typically spent on upscale showrooms 10 to 15 years ago. But Mr. Jackson believes the push into luxury facilities will drive AutoNation's profit growth in the coming years, especially once the economy and auto sales bounce back.
He estimates the Palm Beach store will generate an after-tax return on invested capital of more than 15%, outstanding for any type of retailer. His forecast is based on the expectation of a dramatic rise in new-car sales and service revenue. In November, the first full month of operation, the store sold 335 new vehicles, making it the fifth-largest Lexus dealer in the U.S. A year ago, it sold 199 and ranked 25th.
For dealers that sell the three top luxury brands -- Lexus, BMW and Mercedes -- building palace-like showrooms is also just about the only way to grow. The three companies that make those cars keep supplies of the vehicles tight. Many dealers could sell more cars, but they can't get additional vehicles from the manufacturers.
That was a big factor in AutoNation's decision to spend heavily on the Palm Beach store. For the past few years, Lexus has offered deals under which it will allocate more cars to dealers that upgrade their facilities. For the $35 million investment in its new showroom, AutoNation's Palm Beach can order 2,000 cars on top of its normal allocation over the next 18 months or so. That leaves room for a lot of growth. Last year, the store sold 2,710 new cars.
The big three luxury brands also limit the number of dealerships. And building a bigger facility means Lexus won't put another store in the area.
But not all dealer chains think luxury is the way to go. Group One Automotive Inc., a Houston-based chain with 96 dealerships in 14 states, operates a number of premium-brand dealerships, but it is leery of going overboard on opulent touches in its showrooms, says Pete DeLongchamps, the company's vice president of manufacturer relations. "We have to produce a return for our shareholders," he says, adding that the company doesn't want its showroom amenities to overshadow the cars.
Even so, Group One is expanding its luxury business, and yesterday acquired three new premium dealerships in South Carolina and Georgia.
Moreover, the return target set by AutoNation's Mr. Jackson may be tough to reach. A.J. D'Amato, president of Newport Lexus, said the dealership is profitable, but because of the heavy investment costs will take a few years to hit the return target.
With so much at stake, AutoNation went to considerable lengths to get the look of the Palm Beach store right. Its designer, Brad Hodgen, started by spending hours just sitting in Lexus vehicles. The idea was to create a showroom that creates the same atmosphere as a Lexus.
He also borrowed from some Four Seasons hotels, in particular the Four Seasons Aviara Hotel, in Carlsbad, Calif., a site used by Lexus for dealer seminars on customer service. "It makes you feel like you're in a high-end place, but it's not gaudy or stuffy or pretentious," he says.
He found the two types of wood he used by leafing through Yachting magazine. The centerpiece of the main display floor is a black granite wall with water trickling over it, giving the wall a shimmering appearance. A Lexus logo in brushed metal seems to float on the water. Mr. Hagen got the idea from a similar water wall he saw at a Ruth's Chris Steak House in Florida.
Not surprisingly, some car owners hail the changes. "I'm telling you, this is class, buddy," says Barry Speak while reclining in a vibrating massage chair at the Palm Beach Lexus store. Owner of a 2005 Lexus LS 4300 sedan, Mr. Speak says there is no doubt he will come to the Palm Beach store for a new vehicle in a year or two.
"My wife and I are going to be fighting over who gets to take the car in now," he says over the chair's hum.
"You're not kidding!" Jane Speak chimes in from the store's other massage chair.
Write to Neal E. Boudette at neal.boudette@wsj.com
Coffee Bars, Massage Chairs
To Draw Super-Rich Customers
By NEAL E. BOUDETTE
December 18, 2007; Page B1
West Palm Beach, Fla.
For many people, a trip to the auto dealer means a mind-numbing hour or two in a plastic chair with some tattered magazines and stale coffee.
But some major auto retailers are starting to change that, at least for buyers and owners of luxury vehicles. In the past year or so, several dealership chains have begun giving their luxury-car showrooms multimillion-dollar makeovers. The goal is to create the look and feel of five-star hotels for customers, increase the dealerships' car allocations and even make it less likely that rival dealerships will pop up nearby.
Lexus of Palm Beach recently opened a luxury showroom featuring a water wall, back center.
Just last month, AutoNation Inc., the country's largest chain of auto dealerships, opened a gleaming glass-and-stone Lexus store in this wealthy enclave north of Miami. The sales floor is made of polished porcelain tile, and the walls and counters are accented with cherry and bird's-eye maple veneer.
"Guests," as Lexus calls its customers, leave their cars with a valet and are then guided by a personal concierge to a European-style coffee bar offering complimentary espresso, cappuccino and a selection of pastries prepared by a chef trained in Rome. "We have customers checking into world-class hotels, they shop on Fifth Avenue and they expect a certain kind of experience," says Mike Jackson, AutoNation's chief executive.
Newport Lexus, a store owned by Wilson Automotive Group in Newport Beach, Calif., opened a year ago. There, customers can work on their putting game on a seven-hole green. Across the street, a huge Mercedes-Benz showroom owned by the closely held Fletcher Jones Management Group offers free shoeshines, manicures and shuttles to the airport. Last summer, Herb Chambers Lexus in Sharon, Mass., part of the Herb Chambers Cos. dealership chain, moved into a new building with a fireplace lounge, soaring skylight and spiral staircase.
More are on the way, too. Over the next year, AutoNation will open a new Mercedes store in Delray Beach, Fla., and redo BMW stores in Dallas; Tucson, Ariz.; and Las Vegas; and Mercedes stores in Miami and Sarasota, Fla.
The rise of super-luxury dealerships reflects the country's growing ranks of wealthy individuals and the ways companies are trying to cater to them. At hotels, for example, five stars are now nearly passé, with more and more six- and seven-star properties cropping up around the world.
The new auto showrooms also show the change in luxury auto dealerships from 20 years ago. Lexus, which was launched by Toyota Motor Corp. in 1989, was once alone in offering loaner cars to customers who brought vehicles in for service, says Vince Liuzzi, general manager of Herb Chambers Lexus. Now many do that. "You've got to do a lot more to wow people now," he says.
The Newport Lexus dealership in California features a putting green to draw customers.
AutoNation and other dealership groups are also betting there is big money in building luxury showrooms. The Lexus of Palm Beach dealership moved from a much smaller, older facility a few miles away to a building that cost $35 million to construct, about four times what dealers typically spent on upscale showrooms 10 to 15 years ago. But Mr. Jackson believes the push into luxury facilities will drive AutoNation's profit growth in the coming years, especially once the economy and auto sales bounce back.
He estimates the Palm Beach store will generate an after-tax return on invested capital of more than 15%, outstanding for any type of retailer. His forecast is based on the expectation of a dramatic rise in new-car sales and service revenue. In November, the first full month of operation, the store sold 335 new vehicles, making it the fifth-largest Lexus dealer in the U.S. A year ago, it sold 199 and ranked 25th.
For dealers that sell the three top luxury brands -- Lexus, BMW and Mercedes -- building palace-like showrooms is also just about the only way to grow. The three companies that make those cars keep supplies of the vehicles tight. Many dealers could sell more cars, but they can't get additional vehicles from the manufacturers.
That was a big factor in AutoNation's decision to spend heavily on the Palm Beach store. For the past few years, Lexus has offered deals under which it will allocate more cars to dealers that upgrade their facilities. For the $35 million investment in its new showroom, AutoNation's Palm Beach can order 2,000 cars on top of its normal allocation over the next 18 months or so. That leaves room for a lot of growth. Last year, the store sold 2,710 new cars.
The big three luxury brands also limit the number of dealerships. And building a bigger facility means Lexus won't put another store in the area.
But not all dealer chains think luxury is the way to go. Group One Automotive Inc., a Houston-based chain with 96 dealerships in 14 states, operates a number of premium-brand dealerships, but it is leery of going overboard on opulent touches in its showrooms, says Pete DeLongchamps, the company's vice president of manufacturer relations. "We have to produce a return for our shareholders," he says, adding that the company doesn't want its showroom amenities to overshadow the cars.
Even so, Group One is expanding its luxury business, and yesterday acquired three new premium dealerships in South Carolina and Georgia.
Moreover, the return target set by AutoNation's Mr. Jackson may be tough to reach. A.J. D'Amato, president of Newport Lexus, said the dealership is profitable, but because of the heavy investment costs will take a few years to hit the return target.
With so much at stake, AutoNation went to considerable lengths to get the look of the Palm Beach store right. Its designer, Brad Hodgen, started by spending hours just sitting in Lexus vehicles. The idea was to create a showroom that creates the same atmosphere as a Lexus.
He also borrowed from some Four Seasons hotels, in particular the Four Seasons Aviara Hotel, in Carlsbad, Calif., a site used by Lexus for dealer seminars on customer service. "It makes you feel like you're in a high-end place, but it's not gaudy or stuffy or pretentious," he says.
He found the two types of wood he used by leafing through Yachting magazine. The centerpiece of the main display floor is a black granite wall with water trickling over it, giving the wall a shimmering appearance. A Lexus logo in brushed metal seems to float on the water. Mr. Hagen got the idea from a similar water wall he saw at a Ruth's Chris Steak House in Florida.
Not surprisingly, some car owners hail the changes. "I'm telling you, this is class, buddy," says Barry Speak while reclining in a vibrating massage chair at the Palm Beach Lexus store. Owner of a 2005 Lexus LS 4300 sedan, Mr. Speak says there is no doubt he will come to the Palm Beach store for a new vehicle in a year or two.
"My wife and I are going to be fighting over who gets to take the car in now," he says over the chair's hum.
"You're not kidding!" Jane Speak chimes in from the store's other massage chair.
Write to Neal E. Boudette at neal.boudette@wsj.com