With shoppers flocking back to showrooms, auto dealers have begun sprucing up reception areas, service centers and exteriors. While these renovations have come at the urging of car manufacturers, which franchise the dealerships, the investments also reflect the industry’s recovery from the COVID-19 downturn.
“A renovation is typically required for auto dealerships every five to seven years,” notes Sam Cicero, president of Cicero Construction Group, a general contractor specializing in renovating commercial properties. “With increasing competition, stakes couldn’t be higher — once customers enter a showroom the dealer only has a few feet to exude a professional atmosphere where customers can put their trust.”
Experience shows that a dealership that is in sync with the branding identity of the car manufacturer is an excellent platform for retaining current customers and continuously bringing in new customers, plus creates the “trust factor” that can inspire customers to buy.
According to Cicero, auto manufacturers direct a look and feel of the showrooms that sell their brands to be consistent, and issue strict mandates down to paint colors, floor tiles, and the type of chairs and desks. Dealers who choose not to participate in these programs may not receive bonus cash from the manufacturer, giving them less leeway in bringing down prices when locked in a bidding war for customers. Given that new car dealership profit margins hover at approximately two percent, this extra bonus cash can make or break a business.
To ensure a successful renovation, Cicero points to three challenges that the dealership must tackle: value engineering, local code violations and remaining open during the construction phase.
Value Engineering
The renovation contractor chosen to modernize a branded dealership must be highly experienced in following the manufacturer’s standardized plans — also known as image programs — and in the art of value engineering. Manufacturers’ image programs can significantly boost the cost of renovating a facility because the dealership must be designed using manufacturer-specified materials. However, manufacturers may provide leeway, especially for larger dealerships. This is where a general contractor skilled in value engineering really pays off.
Value engineering is a systematic approach to providing necessary construction materials at the lowest cost without compromising quality. It is not simply a matter of cutting costs, but rather giving careful consideration to all options, always with the project’s goals in mind. Whether that means finding comparable lighting fixtures that cost less or eliminating costly metal cladding and specialty wall art, these efforts can add value if they keep with the brand standards.
The essence of value engineering is compromise. For instance, can 300 pieces of marble tile specified by the manufacturer to be installed in the dealership’s bathroom be substituted with less expensive ceramic tiles? That depends on several things, such as what is the dealership’s expectations… what kind of wear and tear the flooring will be subjected to… how does this tile affect the overall branding design? While the image program may show the manufacturer wants marble, changing to a ceramic tile that looks like marble and multiplying that savings by 300 is worth considering. Besides cost, another concern of value engineering is time, especially with today’s supply chain issues. If the bathroom must be taken out of service, the quicker the renovation is completed the faster it can be turned back over to customer use. If that means procuring the less expensive tile that meets brand requirements and that can also be sourced faster, it is win-win for all parties.
Local Codes
Another issue confronting the dealership is local building codes. While the brand standards of auto manufacturers must be followed in renovating dealerships, exceptions may have to be made to accommodate local ordinances. For example, branding colors may be in violation with local codes that only allow for certain schemes on the exterior of a building. Or local energy requirements don’t allow for the full height glass entrance store front that the manufacturer wants to provide high visibility on the showroom floor. An experienced contractor can sometimes negotiate with the local jurisdiction or with the manufacturer to receive a variance. Navigating these challenges is made much easier, and less expensive if the contractor is brought in during the schematic design phase.
Staying Open
Of course, if a dealership plans to stay open during a renovation, it will have to adapt. Customers will understand things are a bit out of place, but they’ll be impressed if the dealership can maintain a clean, organized space even in the midst of a major construction project. The contractor will need to have extensive experience with site logistics and safety requirements in the planning of the work. Consideration must be given to maintaining ingress and egress for customers, along with signage and safety barricades directing traffic flow. Noise, dust and debris must be contained, either by sheeting off areas or scheduling construction during off hours. If done correctly the overall customer experience will not be impacted by the renovation, no matter the size or scope.
To learn more, visit www.cicero-construction.com.
