The high cost of moving an entire dealership indoors

LAVAL, QUE. — Some Quebec dealerships are “going large” by bringing their entire inventory indoors where customers can shop year-round in short-sleeve comfort, but it’s not exactly a trend in la belle province.

Albi Mazda in this community bordering northwest Montreal, is among the leaders; with 239,000 square feet (22,000 square metres) of showroom space, it can display 200 cars indoors, making it one of the biggest Mazda dealerships in the world.

This provides the luxury of showing each color and trim level for any given Mazda model in a climate-controlled environment, according to Denis Leclerc, owner of Albi le Géant, a Sherbrooke, Que.- based network of 24 dealerships in the Montreal area.

Albi leads Mazda dealer sales in Canada, and a dealership this size gives his group serious leverage.

For instance, he said, when the new Mazda MX-5 Miata roadster arrived in Canada, most average-size dealerships ordered five to 10 units. Albi Mazda ordered 100, and displayed them all on the second floor of the building, “every model and colour in the catalogue.”

‘EVENT’ DISPLAYS

Leclerc creates events to attract clients to his dealerships.

In a Chrysler dealership he also owns, he assembled an “SRT suite” to show all the Dodge high-performance models together.

“Things like that bring people in, and help sales,” he said.

Large glass surfaces are also an important element in the design, to maximize lighting. That’s why the new dealership has lots of glass, to convey a sense of openness and to allow shoppers to see up close “the true colours of the merchandise.”

Leclerc sees only one downside to bringing inventory indoors: cost.

“You need a lot of money to do that. If you take a medium-size dealership, you will easily invest two or three million dollars more to bring your cars indoors.

“But if I had the money, I would to that with every dealership I own.”

Leclerc said that dealers shouldn’t dismiss weather as a factor in selling vehicles.

“I lost a couple of sales on a rainy day [at an outdoor lot] because the client did not want to go outside to take a better look at the car,” he said. “It’s also a constant struggle to choose which car will [come] inside or stay outside.”

COSTS DAUNTING

Daniel Beaucage of Groupe Beaucage owns 25 dealerships, but none have an all-in- door inventory.

“It’s just too much money,” he said. A square foot of land is about $15 for an outside lot compared to $125 for an inside space.

“If you want to put 100 cars inside with each car needing 250 square feet (23 square metres) of space, it means you need a minimum of 25,000 square feet, (2,300 square metres) and more than $3 million just for the cars.”

Other significant costs include making space for personnel, lighting, heating in winter and air conditioning in summer.

NOT TRENDING

“We did the math and it’s not worth it for us. There are a couple [of fully enclosed] dealerships in Québec, but I don’t think it will become a trend,” Beaucage said. “The cost of doing business is too high. Winter is a reality and we learn to live with it.

“All my dealerships can contain 10 to 12 cars inside, and the rest are outside. I am OK with this.

The group’s newer dealerships follow a more open concept with larger glass surfaces, Beaucage said, “but the way we sell a car stays the same.”

Three- and even four-story dealerships are appearing across the United States, and several have opened in Toronto, but dealers must plan carefully, Leclerc says.

“The money always comes out of the dealership pocket, and if you put $10 million or more into metal and concrete, you need to be sure the sales will follow. We need volume.”

Beaucage said that markets outside large urban centres are too small to support an indoor-inventory business model.