One-stop car shopping - San Francisco autocenter

Nation's Business, Jan, 1988 by Steven B. Kaufman, Melinda W. Nahmias

One-Stop Car Shopping

In the summer of 1983, San Francisco auto czar Martin Swig was looking for relief from the escalating costs of leasing property along Van Ness Avenue, the city's "Auto Row," where he owned five dealerships. He and his partner of 15 years, Edouard Richard, decided to put them all under one roof, in a former discount department store on less valuable land outside the downtown area.

What did their competitors on Auto Row think? "Word was that we would be broke in three months" because customers wouldn't follow them away from Auto Row, Swig recalls.

How wrong they were. The San Francisco Autocenter--among the nation's first "megadealerships"--sold 7,000 new cars and trucks in 1986, up from 5,900 the year before. (On Van Ness, Swig sold 3,000 in his best year.) Swig says annual gross revenues now are "in the $90 million to $100 million range," about three times higher than revenues on Van Ness. A 40-year lease and more than twice as much space (370,000 square feet) for roughly the same cost as the multiple lots on Van Ness made the move all the sweeter.

The Autocenter, in a one-story building that Swig renovated with the help of architect Andrew Drozdawicz, is an example of the changes that are sweeping automobile retailing. Although dealerships spread over acres of prime metropolitan land can still be found, industry observers say new ones on that scale are not likely to be started. The cost of the real estate has simply become too prohibitive, they say.

Swig sees the megadealership as the "prototype" for dealerships that will prosper in the increasingly competitive auto-sales field. With worldwide car and truck production exceeding demand every year, he says, dealers are engaged in a "slugfest for market share." Successful ones find ways to economize in moving their products to market.

Besides the real-estate cost savings, Swig points to the marketing advantages inherent in putting several auto dealerships under one roof. Since the Autocenter is ballyhooed as one dealership with many different makes, ads attract more traffic, Swig says.

And the Autocenter caters to a variety of wallets and tastes. Swig carries cars and trucks made by four American manufacturers (Chrysler, Plymouth, Oldsmobile and GMC trucks), five Japanese companies (Toyota, Nissan, Mazda, Isuzu and Suzuki) and six European makers (Rolls-Royce, Bentley, Range Rover, Sterling, Alpha Romeo and Saab). Dominant among the models on display are the popular Japanese imports, but Rolls-Royces attract special attention at the back of the showroom.

The average inventory is approximately 1,200 cars, says Swig, with 300 at the Autocenter and the other 900 about four blocks away.

Still another advantage to multiple dealerships under one roof is administrative efficiency, says Swig. "We're almost like an extended family," he says. Managers work as a team in a central place rather than perform duplicate tasks at separate locations. Inventory and bookkeeping records are all fed into a central computer system.

The Autocenter benefits consumers, too, says Swig. Customers can shop for different makes without driving around to different dealerships. And Swig tries to eliminate any sense of high-pressure selling. To that end, the Autocenter's showroom has a 9,000-square-foot "free zone," a customer section off-limits to the sales staff. It is a tastefully decorated, maroon-carpeted area where shoppers can relax and mull over decisions without pressure.

Swig began selling cars when he was "a kid in college." He later became sales manager for a Mercedes Benz dealership. Then, in the 1960s, when "the Japanese were accelerating" their presence in the auto market, Swig bought his first dealership, selling Datsuns (now Nissans). His success there led him eventually to ownership of the five Auto Row lots.

Swig's sales show that there are few problems selling such a variety of cars under one roof. But when pressed to name at least one disadvantage, he says: "It's pretty tough to get different manufacturers together and find agreement on the type of advertising and the tenor of your presentation. It takes a coherent philosophy and strategy to make this work."

Photo: Auto dealer Martin Swig sits in front of his San Francisco Autocenter, where he sells 15 different makes under one roof, including the luxurious Rolls-Royce.