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Toyota’s big move is already driving up sales at area car dealerships (9/18/15)

By Terry Box

Every Toyota dealer in the area expects the company to cast a long, tall shadow across Texas with its massive move to Plano in 2017.

But Rusty Gentry, general manager of Toyota of Plano, figures he’ll see it first, crawling across his parking lot daily.

When Toyota of Plano completes its new 100,000-square-foot dealership over the next 18 months, it will be next door to the automaker’s new North American headquarters in West Plano — something Gentry rarely loses sight of.

Through coincidence mostly, the dealership purchased a 15-acre tract just west of the site of Toyota’s headquarters about a year before the automaker disclosed it was coming here.

“We had outgrown our site here [on Preston Road] and bought the land because we wanted to be near all that traffic from the Nebraska Furniture Mart,” Gentry said. “We had no idea how much traffic we will be near.”

Even Toyota stores that aren’t next door to the automaker can expect long-term increases in sales as the company completes its $300 million-plus campus-style headquarters, industry observers say.

In fact, some dealers are already seeing sales growth from the construction work at Toyota’s 100-acre site off Palomino Drive.

“It’s a bit of a phenomenon that always seems to happen,” said Jesse Toprak, president of Toprak Consulting Group of Encino, Calif. “Sales increase. It happened when Toyota opened its factory in San Antonio and when Nissan moved its [U.S.] headquarters to Tennessee.”

Toyota is consolidating all of its major U.S. divisions at the new headquarters, which is expected to open in the first quarter of 2017.

Much of the anticipated sales increases will come from “pure saturation,” Toprak said — the fact that Toyota is frequently in the news, making consumers more aware of the brand.

Ripple effect

Toyota, for example, enjoys a strong 20 percent share of the new-car market in the area around its current headquarters in Torrance, Calif., compared with about a 12 percent share of U.S. sales in 2014.

“When an automaker moves into a community, there’s a local feeling of ownership of the brand,” Toprak said. “They feel their sales help the local economy.”

Toyota of Plano changed its design plans “radically” when it discovered that the headquarters would be right next door, said Gentry, who anticipates at least a 30 percent increase in sales.

The new dealership, for instance, will be about twice the size of Toyota of Plano’s current facility.

“We will see a monster influx of vehicles coming from Toyota employees, employees’ families’ cars and that sort of thing,” he said.

Last year, Toyota of Plano sold 3,203 vehicles, according to the Freeman Auto Report — more than any other Toyota dealer in Collin County.

“There are going to be 4,000 people next door to us at that facility, all of them in Toyota vehicles,” Gentry said.

The dealership plans to include about 100 service bays at its new facility, twice as many as at its current building on Preston Road.

“We will probably need to put 30 extra people on when we move,” he said, a possible 17 percent increase in employees.

Pat Lobb Toyota of McKinney feels the effects now, from vehicle sales related to the Toyota construction project in Plano.

One of the contractors working on the project in Plano, RPM xConstruction LLC, has bought 50 Toyota Tundras over the last couple of years from Lobb, some of them specifically for the Toyota project.

“We had been selling them Toyota pickups all along and they just increased their purchases when they got the contract for the project,” said Pat Lobb, who owns the McKinney dealership.

Lobb, who has been with Toyota for most of his career in some capacity, thinks the benefits are just beginning.

“Toyota associates will tell their hairdressers and their friends and people at the grocery store about where they work and the cars Toyota sells,” he said. “There is a groundswell that is slowly starting to ripple across North Texas and will continue.”

Lasting benefits

Although the move is likely to affect all area dealers, some located miles from the headquarters site still aren’t sure how much direct impact they will feel.

“It’s probably too early to know much,” said David Schoemaker, owner of Toyota of Irving, noting that large numbers of Toyota employees won’t start arriving until next year.

Most of the employees at the new headquarters will be eligible for discounts of some sort on Toyota vehicles, a common perk among automakers.

In California, Toyota leased vehicles directly to its employees and serviced them at the headquarters in Torrance.

State law in Texas, though, prohibits direct auto sales from the factory, so dealers say it is still unclear how Toyota will handle those leases here.

“I think the dealers around the headquarters may feel more right now than the rest of us,” said Schoemaker, whose dealership completed a major $15 million expansion project last year.

But Dane Minor, general manager of Freeman Toyota in Hurst, expects Toyota to allow all dealers in the area to sell and service employee vehicles — and benefit from that business.

“In other cities where Toyota has a major presence, the pattern has been a slow and steady growth,” said Minor, whose dealership was the top-selling Toyota store in the Dallas-Fort Worth area last year. “That will continue as Toyota becomes more of a household name.”

Seven Toyota dealerships already rank among the top 10 dealers in each of Dallas, Tarrant and Collin counties, according to the Freeman Auto Report, compared with five for archrival Honda.

Meanwhile, only one dealer in the four-county Dallas-Fort Worth area — Classic Chevrolet in Grapevine — sold more cars and trucks last year than Freeman Toyota, which moved 4,675 vehicles, according to the report.

Toprak, the industry consultant and a former dealer himself, said the effects from an automaker’s relocation tend to last for years.

“A lot of times, people buy a car because they see a neighbor with one of the vehicles or just hear a brand mentioned frequently,” he said. “I think business will only get better for Toyota dealers there.”

http://www.dallasnews.com/business/autos-latest-news/20150918-toyotas-big-move-is-already-driving-up-sales-at-area-car-dealerships.ece