At a time when many retailers are struggling amid a sluggish economy, local car dealer Hansel Auto Group is embarking on a major construction project at the southern gateway to Santa Rosa.
The company broke ground this month on a $21.3 million expansion that will erect five new buildings and remodel an existing structure on a 9.5-acre site along Highway 101.
The investment comes as auto retailers slowly climb out of a pit.
Car dealers sold 1.2 million new cars and light trucks last year in California, up 10 percent from 2010 but still just half the volume they enjoyed before the recession.
But low construction costs and low interest rates, combined with a sense of optimism about car sales, convinced Hansel Auto Group that it was time to expand.
"I have significant confidence that our industry will return, so I'm investing in the future," said Henry Hansel, president of Hansel Auto Group.
Once the Corby Avenue project is completed in 12 months, it is expected to generate an additional $3 million annually in city, county and state sales tax revenue, Hansel said.
If the estimates hold, Santa Rosa's chunk could be $495,000 in additional sales tax revenue, according to City Councilman Jake Ours.
"It's huge," Ours said. "I'm sure glad it's in Santa Rosa. It adds jobs, it adds lots of tax money, all the things that we have fallen behind in. So we owe the Hansels a big &‘Thank you.'"
Hansel Auto Group, which owns six dealerships in Santa Rosa and Petaluma, is the largest car dealer in Sonoma County. It generated $306 million in sales last year, a 14 percent increase over the previous year, and sells an average of 900 new and used vehicles a month. The company currently employs 463 people, and plans to hire an additional 30 people as part of the expansion.
When the project is complete, three Hansel brands currently housed in a single Corby Avenue dealership — BMW, Subaru and Volkswagen — will each have their own building, giving the company eight dealerships in Sonoma County.
With more room to display its vehicles, the company is betting that sales will grow. It projects the franchises housed on the new campus will generate $100 million in annual sales, up from $67 million currently, Hansel said.
The new buildings will utilize green construction techniques and materials where possible, the company said.
Hansel's strategy is to enhance its customers' experience when they come in to shop for a car or repair their vehicle, an experience that can be daunting.
For example, the exterior of the Subaru dealership will look like a rock-climbing wall, to appeal to core customers who often have bike or ski racks attached to their cars. Waiting areas at the BMW dealership will be designed to resemble the lobbies of luxury hotels, with a quiet environment where those waiting for their cars to be serviced can work on their laptops.
And the company plans to offer free bicycle tune-ups, car washes and pet-related events for its customers, Hansel said.
"I'm trying to create the experience that would be consistent with the reason they're buying that brand," Hansel said. "As long as I'm making this level of investment, I want it to be unique. I want a &‘Wow' factor for my customers."
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