Automotive News - February 11, 2008 - (Page 34) 34 • FEBRUARY 11, 2008 Toyota store a good fit — a tight fit, too San Francisco site doesn’t cramp style — or sales Mark Rechtin mrechtin@crain.com Town cars San Francisco Toyota operates a satellite store out of a tiny space in a great location: on famous Van Ness Avenue. The store Sells about 175 new Toyotas and 50 Scions a month Can hold a maximum of 50 display cars and 80 service cars Must move cars by elevator to service and detailing shops Mostly sells Scions and a few small Toyotas because the larger vehicles won’t fit in the elevator SAN FRANCISCO — To sell Toyotas and Scions out of a squat, landlocked, five-story building on bustling Van Ness Avenue here, Doug Donnellan needs to do some tricky maneuvering. The entire showroom floor at San Francisco Toyota is smaller than the coffee lounge at its main competitor, City Toyota, a megastore on the southwest edge of the city. Each floor of the Van Ness building, which was erected in 1926, has a cramped, 8,000-square-foot layout. The place seems totally inadequate for selling new cars. Yet Donnellan and partner John Horton are doing just fine. San Francisco Toyota is the top Scion retailer among 60 Toyota stores in northern California. How do they do it? Very carefully. Cars are moved by one aging elevator that barely will fit a Highlander, and definitely not a Tundra. The entire building can hold a maximum of 50 display cars and 80 service cars, parked cheek-to-cheek, Donnellan said. “The hardest part is maneuvering the vehicles,” Donnellan said. “It’s tough to move the cars into the elevator, when we have detailing on the third floor and service on the fifth and the display cars as well.” Such is business in the big city, where real estate is sold by the square inch, not the square foot. Donnellan and Horton aren’t complaining about the tight surroundings. In fact, they are making the most of it. The Van Ness location sells about 175 new Toyotas and 50 Scions a month. It is a major reason that the MARK RECHTIN San Francisco Toyota partner Doug Donnellan, right, stands near Scion salesman Steve Kwan — and intimacy is about the only option in this store. Each of the dealership’s five floors has only about 8,000 square feet. Prius is the best-selling vehicle in San Francisco. “San Franciscans believe that if you live here, you buy here,” Donnellan said. “We try to wrap our arms around San Franciscans.” parking attendant nervous. “There are days that test our patience, and we just have to work through it,” Donnellan said. “But it’s a great location, a great service facility. This was not an option. It was a necessity.” The store mostly sells Scions and a few small Toyotas, mainly because the larger vehicles won’t fit in the building elevator. Those vehicles are sold at San Francisco Toyota’s other location, on Geary Boulevard near Golden Gate Park. Dealers normally move into a bigger space when they aim to expand. Donnellan and Horton did the opposite. The original store on Geary Boulevard opened in 1966, but Donnellan and Horton needed room to grow. When a Toyota point in downtown San Francisco came open in 1999, they snapped it up, while holding on to the Geary location. Then they ventured into some of the priciest real estate in the world, setting up shop at 1701 Van Ness near tony Pacific Heights. To give the combined San Francisco Toyota operation more breathing room, Donnellan and Horton recently bought a 30,000-square-foot lot near the Geary location that will become a service center. The original Geary outlet will be converted into a sales-only facility by early 2009. Reinventing auto row Between the Van Ness and Geary showrooms, the dealership sold 3,935 new Toyotas and Scions in 2007 — the fifth-largest Toyota dealer in northern California. City Toyota was fourth, selling 4,487 units. Despite the cramped quarters, the Shuffling cars The service business is even more impressive. The store services 1,500 vehicles a month, shuffling cars in a space that would make a Tokyo valet choice of the downtown location now seems prescient. Van Ness was once San Francisco’s vibrant auto row. Now it is once again becoming a dealership hot spot. A General Motors multiplex is a couple of blocks away, and Kjell Qvale’s British Motor Cars dealership is down the street. Ford is opening a point on Van Ness in a building that has been vacant for seven years. Nearby Honda, BMW and Mini dealerships stretch toward the famous Market Street. Donnellan and Scion salesman Steven Kwan have cultivated the Scion owner base. An event along 49-Mile Drive, starting at the Presidio, drew 350 people and 150 Scions, Kwan said. Given San Francisco’s strong bond with the gay community, the dealership has staffed and provided Scions for the annual Pride celebration for the past four years. And while Toyota Motor Sales prefers that Scion dealers shun local advertising and fleet sales, Donnellan has placed a couple of hundred Scions into the City CarShare and zipcar rental agencies. Only about 30 percent of Scion customers go online to configure their cars before coming into the showroom, Kwan said. “I know corporate wants higher Internet numbers, but we have more people coming in because of wordof-mouth,” he said. “We actually prefer people to come in, especially to choose the color.” This is how Donnellan competes with a monolith like City Toyota, a towering glass-and-white-cement structure with 20-foot ceilings. “City Toyota has done a great job, with a beautiful facility, good people and great owners,” Donnellan said. “But we understand what it takes to do business in the city. We know what we have to do.”c Ford: Benefits of two-tier wages won’t come until 2009 David Barkholz and Amy Wilson dbarkholz@crain.com DETROIT — Ford Motor Co. probably must wait until 2009 before it sees savings from lower new-hire wages negotiated with the UAW. Another round of buyouts and early retirements beginning this month will improve productivity, says Ford’s global manufacturing chief, Joe Hinrichs. But the buyouts won’t open enough jobs for new hires this year, Hinrichs said in an interview. “This year would probably be too ambitious, but I could envision a scenario where it could be possible next year,” he says. But, Hinrichs adds, the timetable “depends on what happens with the take rates” of the buyout program. Hinrichs declined to say how many of the 54,000 UAW-represented workers Ford expects to take a buyout. The program begins Monday, Feb. 18. A provision for a new-hire, or tiertwo, wage at Ford, General Motors and Chrysler LLC was a linchpin in the Detroit 3’s effort to close a $25-an-hour labor cost gap with Asian automakers. It allows GM and Chrysler to hire nonproduction workers — and at Ford, production workers, too — for half the $78 an hour in wages and benefits paid veteran workers. Ford still has obstacles to clear before it can bring in lower-paid workers. Namely, the company intends to close all but one of its Automotive Components Holdings parts factories that are not sold by year end, Hinrichs says. Only a steering parts plant in Indianapolis will stay open until the end of 2010 to meet Ford demand. The 5,200 UAW employees at Automotive Components Holdings can bump back into Ford’s mainstream operations if they don’t take a buyout or choose not to join a supplier that buys an Automotive Compo- nents plant, Hinrichs says. The return of those workers to Ford likely will take any openings created by Ford buyouts. Automotive Components is a holding company for money-losing commodity businesses that Ford bought back from Visteon Corp. in 2005 to relieve the supplier of its financial burden. Visteon itself was created in 2000 when Ford spun off its parts making operations. By 2009, additional attrition at Ford could open jobs for new hires, Hinrichs says. Ford’s approach to two-tier wages is a little different from those of GM and Chrysler. GM and Chrysler intend to pay new-hire wages only for nonproduction jobs. The carmakers are identifying those jobs with the UAW. Ford makes no distinction between production and nonproduction workers for a new-hire wage. Any new hire gets paid the lower wage with the caveat that entry-level wages cap at 20 percent of Ford’s UAW-represented work force. Hinrichs says the Ford approach offers maximum flexibility to get new hires in the door, while continuing to allow veteran line workers to move to less-strenuous nonproduction jobs once they open. c LOOKING FOR A CURE FOR… rs ale ! I Improving customer retention? I Lowering used car reconditioning costs? RN T TU E HE PAG r nde wo The d car ew n for rug d I Increasing your sales per repair order?
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