State of Suburbs: Pent-up demand fueling auto market

  • Bob Rohrman's Lexus of Arlington is the largest Lexus dealership in the nation.

      Bob Rohrman's Lexus of Arlington is the largest Lexus dealership in the nation. Bob Chwedyk | Staff Photographer

  • Colin Wickstrom of Wickstrom Ford and Jeep in Barrington.

      Colin Wickstrom of Wickstrom Ford and Jeep in Barrington. Mark Welsh | Staff Photographer

  • Ray Scarpelli Jr. owns Ray Chevrolet in Fox Lake.

      Ray Scarpelli Jr. owns Ray Chevrolet in Fox Lake. Gilbert R. Boucher II | Staff Photographer

  • Arlington Heights Ford.

    Arlington Heights Ford. Daily Herald File Photo/Mark Welsh

  • Bret Matthews, left, and Jim Spellman are partners at Chrysler Jeep Dodge & Ram in Glendale Heights.

    Bret Matthews, left, and Jim Spellman are partners at Chrysler Jeep Dodge & Ram in Glendale Heights. Daily Herald File Photo/Bev Horne

 
By Richard R. Klicki
rklicki@dailyherald.com
Updated 8/29/2015 1:19 PM

Although the Great Recession ended years ago, Colin Wickstrom still sees a good amount of pent-up demand in the automobile market.

"During the recession period of 2008-2010, people sat back and watched the market," said Wickstrom, who with brother Richard operates Wickstrom Auto Group in Barrington. "We're now seeing the industry as strong as ever, and we'll see that trend continuing because there is still that pent-up demand."

 

New car sales in Illinois have risen steadily since 2009, totaling $28.4 billion in 2013, according to latest figures available from the National Automobile Dealers Association. That accounted for 15.1 percent of all retail sales in the state.

The 440 or so new car dealers in the greater Chicago area sold 152,595 vehicles this year through May, according to the Oakbrook Terrace-based Chicago Auto Trade Association. Sales for the year are up 3.1 percent over the same period in 2014, while 2014 saw a 10-percent increase in sales over 2013.

While some local dealers closed during the recession -- in part due to automakers such as General Motors and Ford eliminating brands such as Mercury, Pontiac and Saturn -- those who weathered the lean times have benefitted by adapting their businesses to meet changing customer needs.

Ray Scarpelli Jr., owner of Ray Chevrolet in Fox Lake, notes that while some people still may be loyal to a particular auto nameplate, more buyers are looking for the best overall sales and service.

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"Brand loyalty is still there, but it works in tandem with loyalty with the business that's offering that brand," Scarpelli said. "If you get a great purchase and service experience, you'll remain loyal because of the dealership.

"And that's not blind loyalty, that's something we have to earn," he added.

Wickstrom agrees, adding that as automakers have become more consistent with the quality of their products, the onus is on the local dealers to develop that customer loyalty.

"The quality of vehicles across the lines, from American to Japanese and Korean, they're all nice and the competition is so rigorous," Wickstrom said. "Everybody makes nice stuff, so the more the dealership can do about the experience -- make it better and more efficient -- the more that will attract the consumer."

The Internet has also been a big boost for local dealers, as customers have become better informed and prepared even before they walk into the showroom.

                                                                                                                                                                                                                       
 

"It takes away a lot of the mystery that was with car dealerships," Scarpelli said.

In addition, he added, being online has broadened dealers' customer base beyond the local market.

"Before, I was dependent on drive-bys," he added. "Now my market is anybody who can see me online."

While some national chains, like AutoNation and CarMax, have come into the market, suburban auto dealerships are still primarily family-owned -- many currently led by second- and third-generation owners.

And that's a trend that's likely to continue.

"Auto dealerships are huge investments," Scarpelli said. "Most will still be family-owned, but you may see some big players come into the area at the same time."

Wickstrom also said he expects the suburban industry to grow through family-owned auto groups, which will continue to acquire new brands or dealerships.

"It's a more efficient model," he said. "You can run consolidated offices, cross-pollinate the family brand, leverage buys for supplies and advertising, and cross-function employees.

"I don't see any one company becoming the gorilla."

Unique experience

When Bob Rohrman's Lexus of Arlington opened its new facility in July at 1510 W. Dundee Road in Arlington Heights, it became the largest Lexus dealership in the country.

But the 40-acre dealership provides more than just a platform for the 1,500 vehicles for sale.

In addition to the showroom and service facilities, the 170,000-square-foot main building also has a movie theater, playground, massage chairs, gym, golf putting green and a salon for haircuts, manicures, pedicures and more, said General Manager Marcin Ajdukiewcz

"There is not another store in the U.S. that delivers the experience that we do," he said.

It's another level up from the Acura and Lexus dealership in Palatine that Rohrman has owned since the late 1980s. At that time, there was only one model of Lexus available.

"Now we have eight or nine different models and you need more space for the inventory and for the customers," Ajdukiewcz said.

New owner, same 'family'

Hoskins Chevrolet, a longtime dealership in Elk Grove Village, became Castle Chevrolet North in April after the unexpected death of third-generation owner Lee Hoskins on New Year's Day.

But while the dealership has a new owner, the staff remained at the behest of Hoskins' widow, Sharie, who insisted it be written into the terms of the sale that all employees who wished to remain had to be retained.

General Manager Dave Lasher said many on staff have never worked anywhere else or have been employed by the dealership for decades.

"We reached out immediately to Chevrolet to get their input on locating someone who was looking for another Chevrolet dealership, and we were pointed in the direction of the Castle group," Lasher said.

Castle management kept all the employees on board, resulting in a seamless sale and transition to the Castle family of dealers, which also includes Castle Chevrolet in Villa Park and Castle GMC in North Riverside.

Although the name on the sign is different, the same people are at Castle Chevrolet North, right down to the porters.

Two paths come together

Jim Spellman and Bret Matthews come from diverse work backgrounds, but have been friends for 25 years and have found a calling together with three Chicago area car dealerships; DuPage Chrysler Dodge Jeep Ram in Glendale Heights, Libertyville Chevrolet and Happy Hyundai in Oak Lawn.

Spellman worked in the automobile business for most of his life, starting as a porter for a Jeep dealership, then selling cars. Matthews, while a full partner from the time the Chevrolet dealership opened, only began working full time managing the dealerships last fall with the acquisition of the DuPage store.

"We had a family business, Matthews Paint Co., that manufactured paints," Matthews said. "Jim and I had talked about partnering for a long time."

Their diverse business paths has been an asset.

"He (Matthews) brings a different perspective to the business as I have traditionally worked in the auto industry my entire life," Spellman said.

Matthews likened his former company to a dealership because it was a family business, a situation that translates well to the world of selling cars.

"You want to do right by your family and your customers and here you're taking care of your employees and along with them, taking care of your customers," he said.

Arlington Heights Ford is among a small group of Ford and Lincoln dealerships nationwide to be recognized with the 2014 President's Award by Ford Motor Company. The award honors dealerships that have excelled in automotive retailing in 2014 by providing exceptional customer service and satisfaction. It's the 26th consecutive win for Arlington Heights Ford, owned by John Guido Sr. and managed by his sons Tony Guido and John Guido Jr. No other dealership in the country has won this award more consecutive years.

Muller's Woodfield Acura dealership will move to the former site of Dover Straits restaurant at Golf Road and Gannon Drive in Hoffman Estates in late spring 2016. The current Acura dealer on Higgins Road will become an Acura Pre-owned Certified Center. Scott Muller, president of the dealership, said being able to separate the new and pre-owned vehicles on two sites will be a boon for the expanding business.

Zeigler Auto Group Inc. plans to open a second dealership in Downers Grove, according to the Downers Grove Economic Development Corp. The new dealership will feature Chrysler Ram Promaster vans, as well as new Chrysler, Dodge and Jeep vehicles, and some pre-owned cars. Zeigler Chrysler Dodge Jeep Ram opened its first location at 2311 Ogden Ave. in Downers Grove in 2009. The second will be at 2501 Ogden Ave.

• Meanwhile, Zeigler is also pushing ahead with plans to build a dealership in Lindenhurst. Lindenhurst officials earlier this year approved the village's first economic incentive package for the development of a proposed Nissan dealership on the southwest corner of routes 132 and 45. As part of the pact, the village would share 50 percent of the sales taxes generated by the business with Zeigler for 15 years.

Schaumburg Toyota was honored by Toyota Motor Sales USA Inc. with two of the company's highest dealer awards for 2014. The dealership received the Customer First Advisory Board Award, which honors Toyota's top 50 dealerships for parts and service customer satisfaction, and the President's Award, which pays homage to Toyota dealerships throughout the U.S. that achieve high standards of performance in all facets of the automotive dealer profession, including vehicle and parts sales, service and customer satisfaction.

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