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KC auto dealers pour tens of millions of dollars into upgrades

Updated: 2014-01-07T20:39:34Z

By GREG HACK

The Kansas City Star

The check-in area is bright and airy, with a pleasant view of Indian Creek. Nearby rooms for lounging have Wi-Fi and comfortable new furniture.

Concierges in the cafe will bring you breakfast or lunch at no added charge. Adjacent conference rooms each have a fireplace. Granite tabletops and marble wall accents add to the luxury look.

This might sound a bit like the Ritz, but it’s the new digs for Jay Wolfe Acura, a car dealership on 103rd Street just east of State Line Road.

Like several other area dealerships that have rebuilt or upgraded in recent months, it aims to make waiting on an oil change or negotiating a deal on a new car something to look forward to, instead of endure.

“The environment has changed in our business,” said Lee Hubbard, managing partner at Jay Wolfe. “As the products have become closer in reliability, safety and other areas, we have to do more.

“I want the buying experience to be easy and ownership to be great.”

To that end, he said, the Jay Wolfe group spent $12 million rebuilding or remodeling its area Acura, Honda and Toyota-Scion dealerships, capped by the new Acura building, which was ready in October.

Several other dealers — some familiar names for decades like Jay Wolfe, others relatively new to the area — made similar investments in 2012 and 2013.

Besides making things much nicer for their customers and, the dealers hope, giving them a competitive edge, the projects pumped more than $85 million in construction spending into the area economy. And the real total is more, because some dealers declined to put a price tag on their work or didn’t want to discuss their improvements at all.

Regardless of the total, the upgrades are another indication that the auto business is a real part of the economic recovery. U.S. auto sales were up an estimated 8 percent last year, it was reported Friday as December’s numbers came in, and the Kansas City area is in line with that.

Larry Carl, the CEO of the Automobile Dealers Association of Greater Kansas City, said sales in the area were up 7½ percent through November. When the final breakdowns for the area are in, he said, sales of new vehicles should top 65,000.

“Sales have been on a growth trajectory for three years,” he said. And solid sales “are projected to continue in 2014. The national average age of vehicles on the road is still about 11 years.”

Carl’s association, made up of the 85 new-car dealers in the area, had 100 members in early 2009, so the Great Recession took a toll. But with sales rising and interest rates low for construction loans, several dealers decided the time was right to expand.

Another well-known area name who rebuilt recently is Frank Ancona Honda, just east of Interstate 35 and south of 127th Street in Olathe.

Michael Ancona, president of the 50-plus-year-old family dealership, said a $6 million project demolished about 60 percent of the dealership and “rebuilt on top.” Much of the rest was remodeled.

The construction disrupted most aspects of the business, with some staff working out of trailers till September. And because of weather delays, “we’re not 100 percent finished, but 98 percent,” Ancona said, with a few cosmetic touches likely to wait till spring.

But the hassle was worth it, he said. Ancona’s new showroom is 53,000 square feet, compared with 32,000 feet previously. And a larger service area includes better drive-in access and a much more spacious, well-appointed waiting room.

“Honda always encourages dealers to improve their facilities,” Ancona said. Given the improving economy and affordable financing, “we needed to upgrade.”

Other dealers that have upgraded echoed those reasons. Most brands set standards for their dealerships when they do make improvements, but leave it up to the franchises to decide when to remodel or rebuild.

Another 50-years-plus family dealership, Dave Cross Motors, also decided to rebuild and expand. The Buick-GMC dealership on Blue Parkway in Lee’s Summit added 28,000 square feet of space, finishing in September.

Like Ancona and others, president Dave Cross described substantial interruptions for his staff but even bigger benefits when all the work was complete. He also spoke with obvious pride in his family business, which bought adjacent land when it became available and went from around 2 acres to more than 5. Cross also noted it was the only “new from the ground up” Buick-GMC dealership built in Missouri recently.

He said his father, also Dave Cross, started the franchise in 1960, built new facilities in 1965 and was at the helm till 1993. And three of his sons — including a third Dave Cross — work in the business now. One of them, general sales manager Chad Cross, said customers were “really enjoying” the “fantastic” new dealership.

Another benefit that Dave Cross and other dealers mentioned was the added energy efficiency that new facilities can bring.

“We have solar panels on the roof,” he said, “and lots of LED lights.”

In the efficiency arena, Legends Toyota can claim to be the area champ. It opened in June 2011 with around 40,000 square feet of space, just east of Interstate 435 on Parallel Parkway in Kansas City, Kan. It also met enough of the Leadership in Energy & Environmental Design criteria for conservation and energy efficiency to win LEED Gold certification, a rarity for an auto dealership.

Then Legends Honda opened next door in April 2013 with roughly 30,000 square feet.

“It isn’t LEED,” said Steven Kurtz, president of the two dealerships, “but it has some wind turbines” and other efficiency features.

Legends is a relatively new name in the area, owned by Performance Auto Group, which is based in Omaha and has more than a dozen dealerships in Nebraska.

Kurtz said more than $20 million total, “upwards of $10 million each,” had been invested to build the Legends dealerships.

Performance was looking to expand beyond Nebraska, Kurtz said, and thought fast-developing western Wyandotte County was promising. So it bought and made plans to rename and move Roger Smith Toyota from 73rd and State in Kansas City, Kan., and Independence Honda from Noland Road in Independence.

Legends avoided some of the dislocation hassles other dealers have gone through by operating at the old locations till the new dealerships were ready.

“We’re really bullish about the area,” Kurtz said, noting that the Cerner Corp. office complex, Sporting Kansas City soccer stadium, Kansas Speedway and Hollywood Casino generated “a lot of business and traffic.”

And with new facilities, he said, his dealerships can give customers “big flat-screen TV, Wi-Fi, a cappuccino machine. And the kids room has toys, Wii games to play.”

But the biggest player in the area’s dealership building boom has been the Hendrick Group, also based outside the area. Hendrick, with its headquarters in Charlotte, N.C., bills itself as the country’s second-largest privately owned dealership group and has poured $45 million into rebuilding and rebranding its eight area dealerships.

Hendrick has been in the area for 20 years, first buying the Select Automotive franchises and then the Superior group, but now all its dealerships bear the Hendrick name. It completed its rebranding and remodeling or rebuilding of all its area dealers last summer when Hendrick Lexus opened at 6935 W. Frontage Road in Merriam.

The 68,500-square-foot Lexus dealership joined Hendrick’s Toyota-Scion dealership just west of I-35, across from where the new Ikea store is going up, and in an area where other dealers offer luxury brands such as Porsche, Jaguar and BMW.

The brand new dealerships were part of moves that let Hendrick’s Buick and GMC dealership take the former Superior Lexus spot northeast of the intersection of State Line and I-435. And along Shawnee Mission Parkway east of I-35, Hendrick Nissan was remodeled, and a new, much larger Hendrick Chevrolet was built.

“The Chevrolet space doubled in size,” said Kirk Heppler, vice president of the Hendrick Group. “It’s one of our largest Chevrolet dealerships” in the country.

Coming out of the recession, Heppler said, “the business turned in 2009 and 2010.”

“Our service departments were operating at their maximum,” he said. “We were at the breaking point and had to do something.”

Other conditions also were right, he said, including “interest rates at record lows. That in itself dramatically improved” the ability to expand.

The land west of I-35 was attractive, he said, and “the city of Merriam was outstanding to work with.”

Though Hendrick’s moves and Dave Cross’ construction involved some General Motors dealerships, the U.S. automakers’ dealerships haven’t been as involved in the Kansas City area construction boom the past two years.

In part, that’s because some of them rebuilt or remodeled on the cusp of the recession and won’t need to again for several years.

“These things do go in cycles,” said Carl of the auto dealers association.

Gladstone Dodge, Chrysler, Jeep & Ram dealership on North Oak Trafficway was one of the first of the recent wave.

General manager Anderson Foster said the dealership in spring 2012 finished a $1.5 million revamping, adding a service bay and remodeling other areas to meet Chrysler’s standards.

Olathe Ford Lincoln also got involved, said Sam Mansker, president of the combined dealership. It started building a new Lincoln showroom about a year ago and moved into it in August.

Mansker said the $1 million-plus project “met a growing need” for space for Ford’s upscale brand.

“Lincoln is a growing franchise,” Mansker said.

Carl said the building surge had been good for area dealers and the overall economy. And with vehicle sales back up, too, he said, “that helps make the decision easier” when a dealership needs to upgrade.

To reach Greg Hack, call 816-234-4439 or send email to ghack@kcstar.com.

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