Traditional auto dealers in Los Angeles face a powerful threat on the horizon: The automotive superstore, a new type of dealership soon to explode all over L.A. County.
AutoNation and CarMax Inc. have already begun constructing or operating local superstores, and Driver's Mart will likely follow in the coming year.
All three chains offer giant selections of new and used cars, often sold at a discount. They use a sticker-priced, haggle-free computerized system designed to make buying a car more pleasant and convenient for consumers. They also tend to offer numerous brands under one roof or in close proximity, to make comparison shopping easier.
In January, AutoNation purchased Magic Ford of Valencia in a Bankruptcy Court auction for about $21 million. CarMax, meanwhile, has signed agreements to develop superstores in Carson and Duarte, part of its plan to build between eight and 12 giant dealerships in Southern California
Close on their heels is Driver's Mart, which was formed a year and a half ago when 20 of the nation's largest auto dealers banded together to create a chain of used car superstores.
The group is represented in L.A. by Galpin Ford owner Herbert F. Boeckmann II, who in June signed an option agreement to purchase 8.3 acres of land on Front Street in Burbank near the Golden State Freeway (5). Boeckmann has said he plans to build up to five new dealerships on the site, and while he has given few specifics, analysts say it's likely that at least one of them will be L.A.'s first Driver's Mart.
All three chains have said they intend to build up nationwide networks of new- and used-car superstores. Each has targeted Southern California for anywhere from eight to 14 outlets.
Donald L. Keithley, a partner at J.D. Power & Associates, said past experience in other parts of the country has shown that when multiple auto superstores enter a market, smaller retailers begin to suffer. But the superstore concept is too new to be sure how it will impact L.A.'s network of smaller dealerships. In fact, the big new dealerships might even boost business for the smaller ones.
"In other cities where this has happened, the immediate effect when the first superstores arrive is typically to help (existing) new car dealers by legitimizing them," he said.
The coming onslaught is of little concern to Bud Barish, owner of the Barish Volkswagen dealership in Woodland Hills. Barish predicted that the auto superstores will be a short-lived phenomenon, because they provide an inferior level of customer service to traditional, smaller dealers.
For reprint and licensing requests for this article, CLICK HERE.