The Policaro Group broke ground July 13 and 14 on new locations for a pair of luxury dealerships in Brampton, Ont., as sales in Canada’s luxury-vehicle segment stay strong despite higher interest rates.
Northwest Lexus and Policaro Acura, whose current sites sit next door to one another on the east end of Brampton, will both move to new locations at a fast-growing auto mall that hosts a series of luxury dealerships on the city’s north end.
“Given the competitive brands that are in the area, this is where the customers are going to be, and where we feel luxury retail will be, not just for Brampton, but we feel this is a destination,” said Francesco Policaro, CEO of the dealership group that owns seven new-vehicle stores across the Greater Toronto Area.
Policaro already has a BMW store at the emerging auto mall at Hwy. 410 and Mayfield Road. Other luxury brands operating nearby include Audi, Genesis, Jaguar Land Rover, Mercedes-Benz and Tesla.
Francesco Policaro said the relocation of the two dealerships was mainly about adding new floorspace to keep up with customer demand.
The group put ceremonial shovels in the ground at the 35,000 square-foot (3,200 square-metre) Acura site July 13, followed by the Lexus location the following day.
TRIPLE THE SIZE
Northwest Lexus will get a particularly significant scale-up, tripling in size to about 60,000 square-feet (5,500 square-metres), from 20,000 square-feet (1,800 square-metres) previously. The new dealership will have a 13-car showroom, a 19-bay service department and be wired for the electric vehicle era.
The original Northwest Lexus location opened in 2001 and was scoped to sell about 300 cars per year. It’s now retailing more than 1,000 vehicles annually and relying on an adjacent service facility to keep pace with its booming service business.
Policaro has seen luxury sales surge since the start of the pandemic, and the dealership group expects they will remain strong even with higher interest rates, Francesco Policaro said.
“Sales have maintained the same pace that they have since the pandemic began and we’re seeing a rise [in business] on the aftersales side.”
The Bank of Canada raised its benchmark interest rate to five per cent on July 12, its 10th rate hike in the past 18 months.
Despite higher borrowing costs for consumers, Larry Hutchinson, CEO of Toyota Canada Inc., said the outlook for Lexus remains healthy.
“We’re not forecasting the market to boom; we think it’s still going to be restricted by supply somewhat, but we are forecasting continued growth going forward,” he told Automotive News Canada at the July 14 groundbreaking.
While customer demand is still outstripping supply, Hutchinson said Lexus is seeing more stability on the production side and selling a record number of vehicles in Canada.
In the second quarter of 2023, the brand sold 8,993 vehicles, notching a new all-time high for a single quarter.
With a strong growth outlook for the luxury segment, Francesco Policaro said the group has no qualms about making the major pair of investments in north Brampton.
The company’s construction budgets have not been finalized, he said, but building costs will be significantly higher than they were pre-pandemic. Dealership construction ran to approximately $250 per square-foot prior to 2020, he added, compared to about $450 today.
This puts construction costs for the new Northwest Lexus facility at about $27 million, and Policaro Acura at $15.8 million, not including the value of the land.