With sputtering sales and in need of government life support just three summers ago, the auto industry shows signs of a rebound and new growth in Westchester County, where dealers are building or have opened larger showrooms and service centers in a retooled market.
The head of a metropolitan auto dealers trade group, however, said the new construction on dealer lots often is required by auto manufacturers and could add to the financial burdens of business owners struggling to emerge from “a very tough time.”
An industry mainstay in the county, 93-year-old Curry Automotive is the latest company here to make a multimillion-dollar investment to modernize its showrooms, after traveling a rough patch in the recession and credit crisis that deflated dealers and put many out of business here and across the country.
“During the recession, we gave four stores back to the manufacturer,” Bob Carinci, chief operating officer at Curry Automotive, said at the Curry Subaru-Hyundai dealership that opened in June on Cortlandt Boulevard, Route 6, in the town of Cortlandt. Designed for energy conservation and efficiency, the 30,000 square-foot facility has been called the area”™s first “green” dealership for its conformance to design standards of the U.S. Green Building Council”™s Leadership in Energy and Environmental Design program.
In early 2009, the federal government pumped out $24.9 billion in bailout loans to General Motors and Chrysler and followed that stimulus measure with customer rebates of $3,500 and $4,500 for car trade-ins in the so-called Cash for Clunkers program. The Big Three domestic automakers ”“ GM, Chrysler and Ford – already had greatly cut back or eliminated customer leasing, which accounts for a large share of dealers”™ business in metropolitan New York and in the Northeast. ”˜That”™s when we decided it was the best time to get out of the Ford business and consolidate Subaru with Hyundai,” said Carinci. “It was a better business plan for us to not operate Ford.”
The company relocated its Subaru dealership from Crompond Road in Yorktown, where it also operates Honda and Nissan franchises, to its Route 6 location in Cortlandt. Curry in 2007 had acquired the Geis Auto Mall there, making it the largest automotive dealer group in the Hudson Valley, with Chevrolet, Acura, Nissan, Toyota, Honda, Subaru and Hyundai franchises.
“We came out smarter and stronger when we came out of it,” Carinci said of a severe slump that lasted about 1 ½ years. “That”™s why we”™re doing these renovations now. We started this renovation plan during that period. It takes that long to get this approved.”
Curry”™s green Subaru-Hyundai construction project cost about $10.5 million, Carinci said. On an adjacent Cortlandt Avenue lot, the company is beginning demolition work to replace its Toyota showroom and office with a green-designed, 36,000-square-foot facility at a cost of $7.5 million.
In Scarsdale, where Curry Automotive has its headquarters, the company is renovating its 30,000-square-foot Chevrolet dealership. Carinci did not have a cost estimate for that project.
“Chevrolet a few years ago closed a few stores” in Westchester, said Carinci. “We were fortunate to be one of the stores they wanted to keep. I think they had their eyes off the ball for a while and now they build great products. I think Chevrolet, and GM in general, is much more aware of what they need to do now to be successful.”
In the peak years before the recession, approximately 17 million autos were sold annually in the U.S., according to the Greater New York Automobile Dealers Association. In 2008 and 2009, annual sales plummeted to about 9.5 million.
In the metropolitan area, auto sales since 2009 have increased approximately 30 percent, “an enormous rebound,” said Mark Schienberg, the association”™s president. Nationally, vehicle sales could reach the 12.5 million to 13 million range by the end of this year, he said.
“Business is more realistic now,” said Carinci, seated in front of a massive gas fireplace in a customer waiting area of Curry”™s green showroom. “I think before the recession things were out of control,” with lenders “approving people who shouldn”™t have been in the cars they were approved for. I think now this is where business will be and should be.”
Financing by manufacturers and other lenders has “definitely tightened up,” said Carinci, “and other banks aren”™t even in the leasing business now when they used to be.” He said leasing accounts for 70 percent of Curry”™s Acura business, 60 percent of its Honda deals and 35 percent of its Toyota business.
At Tarrytown Honda, owner Dwight Dachnowicz recently received site plan approval from village officials for a 70,000-square-foot dealership that will replace his 19,000-square-foot building at 480 S. Broadway. The project”™s estimated cost has risen from $6 million initially to $9.5 million to $10 million, Dachnowicz said.
“It”™s like buying it (the business) all over again,” Dachnowicz said of his investment. He purchased the Honda franchise, his only dealership, in 2006.
In a nod to customers”™ changed buying patterns, Dachnowicz will replace 11 service bays with a 30-bay service center. In the recession, “The mood of the customers changed” and their focus shifted to used cars and servicing, he said. “You have to react. The used-car business has been excellent since 2008.”
“I think that the used-car market will remain strong even as the inventories build. I think the buying public has become so acutely aware of their own budget” that they”™ll continue to shop for late-model used cars, he said.
In Tarrytown alone, Dachnowicz said, four or five auto dealers have closed since 2008. At Tarrytown Honda, business has rebounded from “about break-even” in 2008 to 2012 sales that are up 23 percent from last year. In the suburban counties of Westchester, Fairfield in Connecticut and Bergen in New Jersey, Honda sales are up 14 percent from 2011, he said.
“Now that the dealer base has diminished, the industry itself is on the rise,” said Dachnowicz. “The overall product quality across the board, whether it”™s domestic or foreign, has gone up. “
The industry crash four years ago “was also a lesson,” he said. “It was really about managing expenses. There was a period there when I didn”™t draw a salary for a little over a year.”
After tightening up on credit, banks are aggressively reentering the auto financing market. Dachnowicz said Bank of America, which financed his dealer floor plan loan, and other banks “are probably more aggressive than I”™ve seen in the last five years.” And banks are more actively lending at competitive interest rates in the used-car market, he noted.
Dachnowicz said low interest rates make this a favorable time for construction projects like his. He refinanced with Bank of America last November and at the same time arranged his construction loan.
But facility improvements can have “a dark side,” cautioned Schienberg at the Greater New York Automobile Dealer Association. “The manufacturers are the ones that are stressing for many of the dealers to put lots of money into these facilities.” The required improvements “could put a burden on small businesses,” he said.
“The manufacturer in many cases sets the standards on what a dealer is required to look like,” said Schienberg. “Those standards at times can be unreasonable and very costly.”
