From Selling Cars to Selling Land
While this is a subject that I don’t ordinary address, something else in the automotive industry is likely to undergo a huge change as a result of disruptions in the automotive ecosystem: the car dealership. We have all heard about the threat to dealers from Tesla’s direct sales model, an approach that bypasses dealerships entirely. But it’s rarer to hear about a dealer that finds their dealership’s facilities/land more valuable than continuing in the business of selling cars. A dealer that focuses more on the utilization of their property over all else. Which is what has happened to a long-time West Los Angeles dealer that decided it would go into real estate development rather than continue to sell Cadillacs and GMCs.
The Martin family has owned Martin Cadillac for over 40 years, which began in Santa Monica and has been located in West Los Angeles for most of its years in operation. Dana Martin, now retired, spent his life selling cars and running the dealership. His son Dan, now in his 40s, decided to take the family business in a new direction, and that is to redevelop their 4.76-acre parcel of land to house 516 apartments, a grocery store, and a 10-story office building. (Their early planning had them retaining a 10,000-ft2 Cadillac showroom, with dealer operations moved elsewhere. Although, there is no indication from recent project communications that they intend to remain a dealer at all?)
The son Dan’s vision for redeveloping their dealership into the Martin Expo Town Center seems to have been born when LA’s Metro public transit agency began construction on the new “Expo Line,” which links Downtown LA with Santa Monica, and is now operational. The Martin dealership is located on Olympic Blvd and Bundy Drive, one block from a new Expo Line station. Thousands of transit riders now travel to and from near the Martin property every day.
Today the dealership currently looks like any Cadillac dealer you might visit. All the signage looks like what you would see from a GM dealer. It currently has a 17,000-ft2 showroom, 61,000-ft2 service center, and 611 parking spaces on the property (which includes rooftop parking). The construction project is slated to begin later this year.
While I’m unsure if it took Dan any effort to convince his father of his plans for redeveloping the dealership, it is clear Dan has put effort into community outreach and getting local public support for his plans. In a promotional video produced to describe the transformation program, father Dana is seen on a couch talking about the project. He talks about how great of an opportunity it is for people to be able to live and work from this site and not have to be in a car. He calls is a “great concept”. Honestly, I almost fell over in my chair hearing this from a car dealer.
The early designs for Martin Expo Town Center seemed a bit modest, and that was good. Having lived in LA near this location a few years ago, it does happen to be one of the most heavily congested and horrible spots in LA’s traffic mess. At evening commute hours, cars just seemed parked on the intersecting streets where the Martin dealership is located. But a few years ago, the project seemed to go to a new level, world-famous Gensler architecture firm was hired, and a new large and glitzy design was unveiled.
Around this time, Jeffrey Hines, a Texas-based real estate developer, with a considerable number of large-scale properties in California, became a controlling-interest partner with the Martins, who now own 49 percent.
The project has been slowed by opposing groups, including a lawsuit, but as of last October, the project was on track.
While most car dealers in the United States don’t have premium property/dealership locations like the Martin family, presumably there are more than a few dealerships that are now seriously considering what effects the changes being brought on by mobility services and, eventually, autonomy will have on their operations.
Continental, an automotive supplier that has a deep engineering bench, is making a huge organizational change, one that Dr. Elmar Degenhart, chairman of the executive board, explains is necessary because, as he puts it, “The industry is changing at a high pace, so we have to change, too.”
Mazda, the Little Car Company That Can, has been working on a number of important fronts of late.
To know that 3,000 cars have been delivered since October 2015 would undoubtedly result in a shrug: in 2017 Toyota delivered 387,081 Camrys, so that 3,000 is less than one percent, and this is in one year, not just over two.