In his office off the Mercedes-Benz showroom in White Plains, Joseph Pepe fielded fast-coming morning phone calls. One was from his uncle, Nicholas Pepe, president of Bianco & Pepe Inc. in Scarsdale and contractor on Pepe Auto Group”™s latest project, a $7 million to $8 million conversion of a former White Plains motorcycle dealership. The contractor”™s three nephews in the luxury auto business have kept their Uncle Nick busy in the slow economy.
In March, the 46,000-square-foot building at 300 Central Ave. will open as the new home of the Pepe Infiniti dealership, now at 15 Water St. in White Plains. The auto company in 2010 paid $5 million to acquire the more centrally located Central Avenue property from its last owner-tenant, Reggie Pink Harley Davidson.
“The Infiniti dealership is the largest-volume Infiniti dealership in the country,” said Joe Pepe, who joined the second-generation family business full-time in 1982. In November, he was named president of the auto group, which owns six dealerships in Westchester County and has more than 300 employees.
With the Infiniti move, Pepe Auto Group will renovate its Water Street building as the new home of Pepe Cadillac. The Yonkers dealership was acquired in 2011 when General Motors refranchised its Cadillac dealerships around the country. The Cadillac dealer will move from 1245 Central Ave. in Yonkers, the former location of Martin Cadillac, which closed in 2010 after GM liquidated its inventory.
In December, Bianco & Pepe ”“ the family”™s original Westchester construction and real estate business ”“ completed a new 60,000-square-foot showroom building for Pepe Auto Group at a former Cadillac dealer”™s site on Boston Post Road in New Rochelle. The Pepe Mercedes-Benz dealership in Larchmont, run by the auto group president”™s older brother, Sal, soon will relocate south on U.S. 1 to the new building.
Completing the luxury auto-lot shuffle, the Pepe Porsche dealership run by the youngest Pepe brother, Robert, will move from Water Street in White Plains to the company”™s former Mercedes-Benz site in Larchmont.
The company expects to complete its expansion and improvement projects by the fourth quarter this year. Since July 2010, Pepe Auto Group will have renovated or newly built 180,000 to 200,000 square feet of space, Pepe said.
The work began in 2010 with a $5.5 million renovation of the Mercedes- Benz dealership at 50 Bank St., where Pepe”™s father, Gene, moved his dealership from Mount Vernon in 1978.
“We didn”™t have a choice,” Pepe said of the recent construction projects. “The manufacturers have kind of held people”™s feet to the fire” to expand and renovate. Mercedes-Benz and other automakers partly subsidize the multimillion-dollar investments.
“It”™s probably the best thing we ever did,” Pepe said. “Our sales are up in this building alone from last year.” The Mercedes-Benz dealer sold more than 2,000 new cars in 2011. Pepe Auto group at its six dealerships sold more than 5,000 cars last year, an approximately 18 percent increase from 2010.
Luxury-auto dealers such as Pepe were not wholly immune to the Great Recession. In 2008, plunging sales led Pepe to cut $600,000 to $700,000 in expenses at the White Plains Mercedes dealership alone. About 30 employees were laid off. Pepe said about half those jobs have been added back as the luxury market, though still “a little challenging” in 2009, has revived.
“I think people have a sense of stability more now than they did in 2008,” Pepe said. “People who have money are spending it.”
“I think people are spending their money more wisely. It”™s an investment like anything else.”
“I think it”™s also about the service. In this day and age, services are really what people are looking for.”
In a race between two German automakers, Daimler AG”™s Mercedes-Benz brand finished a close second in U.S. luxury auto market sales in 2011 to BMW. BMW sold 247,907 vehicles in 2011, while Mercedes-Benz finished the year with 245,231 vehicles sold. Sales of both brands were up 13 percent from the previous year.
Lexus, the Toyota Motor Corp. luxury brand that held the top spot in the U.S. market for 11 years, finished third last year with 198,552 units sold, a 13 percent decline. The Japanese automaker”™s inventory was crippled in the aftermath of the March earthquake and tsunami in Japan.
Pepe sees Cadillac, America”™s long-deposed luxury-market leader, as a mid-luxury brand with “a much stronger future. I think GM has decided they want to put Cadillac back on the map now.
“I think within the next five years, Cadillac will be up there selling as much cars as Infiniti, Audi, Lexus and their group.”
