AUTO SELLERS' BUILDING PLANS SIGNAL OPTIMISM

0 Comments | Gazette, The (Colorado Springs), May 18, 2008 | by DEBBIE KELLEY

Nine auto dealers are planning major construction projects in Colorado Springs, bringing new jobs to the beleaguered building industry and more choices for car buyers in the next year.

The projects mean dealers are banking on economic recovery, increased consumer spending, a population shift toward the east and additional military troops arriving in town.

Several used-car outlets are planned -- including a market newcomer, a publicly traded retailer -- along with a second Honda dealership, two new stores for local Toyota franchises, a new Nissan store, a new Volkswagen store and a new franchise yet to be disclosed.

The economic downturn has resulted in some delays, though, for two projects announced last year: construction of another Volkswagen location and a store from another national usedcar dealer.

1. CarMax The Auto Superstore should be first to the finish line, opening June 5 at 4011 Tutt Blvd., near Security Service Field. It's one of several auto dealers to pinpoint the city's fast-growing northeast side as a prime location for auto sales.

This will be the 96th store in the CarMax Inc. chain and the first in Colorado for the 15-yearold, publicly traded company.

Holding the title of the nation's largest seller of used cars, CarMax reported $8.2 billion in sales in fiscal year 2008, which ended Feb. 29.

"This is a growing community -- it's the right size for us -- and with this addition we'll be continuous from coast to coast," said Craig Meeks, general manager of the new store, who most recently ran a Car-Max in Albuquerque.

A six-week job-recruiting session to fill 85 openings drew 900 applicants, he said, adding that many were attracted to Car-Max's listing on Fortune magazine's "100 Best Companies to Work For."

The company typically hires salespeople who don't have an automotive background but who can communicate effectively, he said.

Local applicants have included educators, retired military and people who have retail sales experience in department stores and home-improvement outlets, Meeks said. Local salespeople will work on commission and salary, and earn an average an annual income in the high $40,000s, he said.

The company is known for its business model of a no-haggle sales approach with prices below Kelley Blue Book. Comparison prices are posted on all cars, and Car-Max offers reconditioning of vehicles and free market-value appraisals, regardless of whether the consumer plans to sell the vehicle to CarMax. On average, each CarMax store sells about 5,200 used vehicles a year.

2. Phil Long Dealerships, Colorado's largest privately owned auto dealer group with 17 new-car franchises and 21 used-car locations, will counter the arrival of CarMax by building its third and largest Valucar Supercenter directly east of CarMax on Tutt Boulevard.

"I think they'll be a good competitor, and we want to be a good competitor," said Bob Fenton, chief operating officer and partner.

Phil Long is under contract to purchase 2.2 acres and has submitted development plans to the city, he said.

Valucar, a 10-year-old usedcar franchise owned by Colorado Springs-based Phil Long, is modeled after CarMax's approach of no- haggle sales and posted, below-Blue Book prices, Fenton said. But the philosophy includes perks Car-Max does not, he said, such as longer standard warranties, certified reconditioning and free oil changes.

"We studied what they did well, found weaknesses in their program and made additions for our customers," Fenton said.

The new location, which Fenton expects to be completed in October, also will feature a quick lube service, a car wash, a reconditioning shop and 14 service bays for light repairs and maintenance work. An automotive electronics store also will be attached.

"We have an active customer base of about 175,000 in Colorado Springs, and we've been talking for some time about the need to put a service center and used-car operation in that area," he said. "We've been here since 1945, and we're going to continue to be aggressive and customer centered."

Sluggish economic conditions have been good for the used-car market, increasing its market share to 60 percent, up from from 50 percent, at stores in his auto group, Fenton said. The new store is projected to sell 250 used cars a month, he said.

3. L2 Auto, the used-vehicle division of publicly traded Lithia Motors Inc., has delayed plans to build a store in Colorado Springs on land it purchased last year west of CarMax, said Chris Holzshu, vice president and chief financial officer for L2 Auto.

"We're exploring all our options," said company spokesman Robert Sacks. "For competitive reasons, we can't comment any more."

The Medford, Ore.-based company opened its first L2 Auto store, which offers an online, Web-based sales process with a no-haggle philosophy, in Loveland last year.

4. Westminster, Calif.-based Piercey Automotive Group has secured a long-term lease on 10 acres in Powers Auto Park, said Bill Piercey, president.

Piercey last fall was awarded a Honda franchise in Colorado Springs and announced it would look for a northern location for a 50,000- to 60,000-square-foot dealership.