A changing automotive retail landscape combined with manufacturer demands for “image” showrooms have spurred the development of auto malls throughout the Lower Mainland as consumers seek not only a new set of wheels but also a convenient shopping experience.
Auto malls – dedicated retail parks where competing brands and dealerships establish themselves – have become increasingly popular over the past two decades as various factors came together to alter the dealership experience.
The Jim Pattison Auto Group has developed two auto malls in the Lower Mainland, including the Northshore Auto Mall and the North Surrey Auto Mall. For president Bill Harbottle, president of the auto group, the changing retail experience has been in part driven by vehicle manufacturers pressuring dealerships to invest in new facilities or upgrade existing ones.
He said the auto mall format was powered by pressure from municipalities for car lots to relocate off major thoroughfares and an understanding that the highest and best use of lands occupied by many older dealerships were valuable and best used for other purposes.
“There was an opportunity there for a number of dealers needing to relocate and rebuild,” Harbottle said of the North Shore auto retail market of the late 1990s. “We had been looking for years for other sites and other buildings we could renovate and we were not having any luck. That’s when we started looking at larger sites and saying we should bring all these dealers together in one area.”
The idea was to create economies of scale and provide a place for dealerships to relocate that could offer them more land at generally lower rates and create a destination that would offer choice and convenience for consumers.
“Years ago, dealers used to say, ‘I don’t want to be right next to my competition,’” said Harbottle. “But in fact, it is proven that the best thing you can do is be next door to your competition because there might be a consumer going to your competition that happens to see your dealership and stops in and looks at your product, as well.”
The Northshore Auto Mall, as it was subsequently known when the first dealership opened around 2000, also allowed new badges to come into the North Shore market, he said.
Taking into account extensive U.S. research and the experience of the Richmond Auto Mall, the 25-acre Northshore Auto Mall incorporated features that had been proven successful elsewhere, including a ring road through the auto mall and design guidelines that provide a uniform appearance while still allowing each of its 12 dealerships to represent its brand image.
Harbottle said that at the time, the Jim Pattison Auto Group found that 40% of new vehicles sold in the U.S. were sold by 13% of U.S. dealers located in auto malls. Dealerships in auto malls tend to outpace the industry in terms of sales, he said. “You realize that by bringing dealers together and creating the destination, you are going to draw people from a broader range,” he said. “As an auto mall, there is an incentive for the consumer to come across the bridge to the North Shore.”
But auto malls do not work in all locations, he added.
“There has to be a need in that particular market area,” he said. Areas where new dealerships already exist in close proximity to each other and are not under pressure from the municipality to relocate are not conducive for auto mall development.
On the other hand, the North Surrey Auto Mall was developed because of pressure from Surrey for dealerships to move off major thoroughfares and a need for the dealerships to update their facilities.
“We found that you can’t just put an auto mall in every community. It really will not work,” he said. “There has to be a need for dealerships to either relocate or expand.”
Most dealers want to own their own property, he said, adding that the auto malls are structured so that dealerships buy their land. An association or some form of company is established to ensure all lot owners are involved in the operation of the auto mall.
“You have to create that structure that looks after the mall and the interests of all the dealers. You’ve got to have very strict articles of incorporation and bylaws so that people don’t deviate from what was the original intent unless everyone agrees that they need to make a change.”
James Duess, general manager of Park Shore BMW in the Northshore Auto Mall, said that within one year of moving into the auto mall in 2001, revenue doubled.
“One of the big benefits is the advertising,” he said. “The collective advertising of all the dealerships chipping in is one of the biggest factors why we’ve increased so much.”
The dealership’s footprint doubled to 1.5 acres, he said, allowing it to construct a larger building, store more vehicles on the lot and expand its parts and service department.
For Christine Fedina, manager of Northshore Auto Mall Ltd., there is friendly competition among the dealers from an administrative point of view. The sharing of industry intelligence among the dealers is helpful for all and informs the marketing campaign for the auto mall as a whole, she said.
The dealerships are also able to collectively leverage each one’s community contributions to have a larger overall impact.
While most of its customers are from the North Shore and downtown Vancouver, its online inventory of used cars as well as it’s marketing are attracting customers from across the Lower Mainland. The development of the auto mall also opened up the neighbourhood to other businesses, some auto-related, others not.
Duess said he would like to have any dealership he opened or acquired in the future locate in an auto mall, adding, “The only issue is trying to find a location within an auto mall that’s available to move into.” •