Deals on wheels a volume business in Cathedral City

Public Record, The, Mar 29, 2005 by Davis, Rick

It's a vehicular version of a smorgasbord, a Hometown Buffet with negotiable menu prices geared to whet appetites initially, but ultimately have the customers leave with smiles on their faces.

In driving through this sector of Cathedral City, one is inclined to wonder whether every make and model of car and truck in existence can be purchased at one of the 14 dealerships located in this threequarter-mile area near downtown.

It just seems that way. Nonetheless, 23 different brands of cars, trucks and sport utility vehicles are stocked on the 13 lots. From Toyotas and Fords to Hummers and Acuras, it is the desert's most concentrated hog heaven of four-wheel machinery.

But the news these days is it's about to get bigger.

In addition to facility expansion of the Mazda, Acura, Honda and Toyota dealerships, O'Brien Hyundai is relocating to a larger facility south of the dealer's current site on East Palm Canyon Drive. And two new dealerships offering yet-to-be-determined model lines are tentatively planned in the same area in the next two years.

"We probably can't have too many dealers here," said Orie Mann, general manager of Palm Springs Volvo, one of the dealerships. "It's sort of one-stop shopping for car buyers. They don't have to drive all over the valley to find the right car and the right deal."

Mann noted that the Cathedral City conglomerate is larger than similar valley dealership clusters such as a section along Highway III in La Quinta and the I-10 Auto Mall in Indio.

"The original dealership area in the valley was in Cathedral City," said Mann. "Now it's a pretty central location valleywide. And I think there's a feeling like everyone wants to be on a winning team. This is an ideal place for a dealership."

According to several dealership representatives, this type of business has become entrenched in the local economy largely because of a healthy working relationship with city government.

"Both sides recognize it's a two-way street," said Mann. "The city does work with us. I think they are fair in dealing with us." The city benefits significantly through sales-tax revenue it receives from the hundreds of deals that transpire at the dealerships year after year. Of the $9 million in sales tax collected annually by the city, about $4 million (nearly 43 percent) comes from the dealerships.

The dealership concentration is the heaviest in Riverside Couny.

And that's healthy for all 13 dealers, in the view of O'Brien General Manager Kenny Zoglio.

"Competition is great. There's nothing wrong with it," said Zoglio. "In fact, I can't wait for us to move to the new location. We'll be closer to more dealerships and I know that will increase my sales numbers."

Twelve years ago, 11 of the 13 dealerships formed an entity called the Cathedral City Auto Center, which pools funds for advertising. Palm Springs Ford Lincoln Mercury and O'Brien are the only city dealerships not in the group, although O'Brien plans to join when it relocates.

I think this is the best location in the valley for a car dealer because of the traffic," said Palm Springs Ford Lincoln Mercury Managing Partner Paul Thiel. "The comer of 111 and Date Palm Drive. Thousands of cars roll by here every day."

Thiel, who joined the dealership 16 years ago, said he does not know why it is not a member of the auto center. "But volume-wise, we're the largest Ford Lincoln Mercury dealership in Riverside, San Bernardino and Imperial counties,

Thiel noted. "We have enough sales volume to do well anyway."

Thiel said the dealerships' relationship with the city has paid dividends on both sides. He cited installation of a traffic signal at the intersection of Highway 111 and the driveway into his dealership as a prime example.

"Customers were having a difficult time turning left against oncoming traffic to get into our dealership," said Thiel. "Buying a car should be as trouble-free a process as possible. But the city had its issues like maintaining flow of traffic. It had to be worked out and we worked with the city to find a way."

Cathedral City Economic Development Director Paul Shillcock said the situation is a case of "the more the merrier for dealerships in the area."

"They all seem to do better when more dealerships are added," said Shillcock. "The business today requires dealers to have huge inventories because the customer wants instant gratification. Drive off in the vehicle they want with the options they want. It's not like years ago when you ordered a new car, then waited six weeks for it to come into the dealership. Now if one dealer doesn't have your car, you go down the street and buy it from another dealer unless brand loyalty is that important. But it is all pretty good quality.

"By having so many dealers grouped together, any time a customer drives by, someone will get a sale."

Shillcock said the city's sales-tax revenue from dealer transactions has increased every quarter for several years. "And this city is very dependent on that, just like Palm Desert relies on retail business and Palm Springs on tourism," Shillcock said. "A city will look at where it has a competitive advantage, such as ours in auto sales. And you maximize it as much as you can."