Car sales are booming, and they’re helping fuel the local economy.
It’s a little less than two weeks before Christmas, and Porsche Bellevue is hopping. The activity isn’t from customers pining to get a great year-end deal, but instead, it comes from a colony of hard-hatted laborers and subcontractors scurrying to prepare the dealership’s new 38,000-square-foot facility at Bel-Red Road and Northeast Eighth Street for a soft opening before the holiday.
“We hope to sell 60 new Porsches by Christmas,” says the dealership’s general manager, Kjell Schei, as he dons a hard hat himself and begins weaving through workers.
That might seem too optimistic given that the new dealership, a couple blocks east of the current Porsche store, will open just six days before Christmas. But now is a good time for such optimism. Auto sales are booming nationally. On the Eastside, refreshed facades and sparkling new dealerships signal the local auto industry is rocking, too.
“The economy here is on fire. There’s so much business going on in the Eastside market, it’s unbelievable,” says Michael O’Brien, who owns 10 dealerships stretching from Marysville to Tacoma, including Toyota-Scion of Kirkland and Renton, Volkswagen of Kirkland, and Lexus of Bellevue.
Nationwide, auto sales hit 16.5 million vehicles in 2014, the highest total since 2006. Sales are forecast by LMC Automotive and J.D. Power and Associates to swell to 17 million vehicles in 2015. Schei expects Porsche Bellevue’s sales growth to exceed the national pace. His dealership sold more than 500 cars last year, a 26 percent increase over 2013.
The auto-sales rebound is not only good news for dealers. Vehicle and parts sales also widely impact Eastside commerce.
“I don’t think people understand the pivotal role the car industry plays in our economy,” Kirkland City Manager Kurt Triplett says. If Triplett had to choose one use for a vacant parcel of city land to maximize revenue: “It’s a car dealership.”
The numbers suggest that would be a wise choice. Auto sales accounted for 25 percent of Kirkland’s sales-tax revenue in 2013. About 800 people work at its 10 new-car dealerships, collectively making them the city’s second-largest employer, behind EvergreenHealth Medical Center.
Farther south, auto sales generated 17 percent of Bellevue’s 2013 sales-tax revenue and 18 percent of Renton’s. Statewide, vehicle and part sales supplied nearly 11 percent of the state’s sales tax in 2013, and Washington’s 330 dealerships employed 20,603 people, according to the National Automobile Dealers Association. But those figures tell only part of the story. NADA estimates that dealerships generate nearly 20,000 ancillary jobs, such as those being done by the scrambling pre-Christmas workers at Porsche Bellevue.
“The typical dealership is very much a mixed-use facility,” says Eric Jones, president and CEO of Bellevue construction firm Foushee & Associates, general contractors for the Porsche Bellevue project. “There’s a retail component, an administrative component, a light manufacturing component, and a huge parking component. They’re challenging jobs.”
Foushee has built or renovated 14 Eastside dealerships in the past few years, and 36 around the Puget Sound region, Jones says. Three of its most significant projects — Toyota-Honda of Seattle, Porsche Bellevue, and Toyota-Scion of Kirkland — generated about 40 percent of his firm’s 2014 revenue, Jones says. Because the auto business is so competitive, manufacturers typically mandate that dealers refresh their facades every three to five years, which keeps contractors’ income flowing.
“Car dealerships carried us right through the recession,” Jones says. “It’s been a real stable niche for us.”
Sales figures don’t reflect dealers’ philanthropic impact, either. Perhaps the most visible local example of this can be found in Kirkland, which has a baseball field named for Lee Johnson, longtime owner of a local Chevrolet, Mazda, and Kia dealership. The Lee Johnson Auto Family, now run by Lee’s son Tod, sponsors the city’s annual Fourth of July celebration.
Ford-Hyundai of Kirkland — whose co-owner, Amy Walen, is a breast-cancer survivor — donates to Evergreen hospital. The O’Brien Auto Group supports Bellevue LifeSpring, a nonprofit that helps feed, clothe, and educate children, and raised $72,000 last year in a Toys for Tots drive.
One O’Brien dealership, Toyota-Scion of Kirkland, recently donated $10,000 to Evergreen to support the purchase of 3D mammography equipment and later raised $5,500 more for the hospital through a breast cancer awareness promotion.
“Our philosophy as a company is if we do business in a community, it’s our job to also give back to that community,” says O’Brien.
Statewide, auto dealers donate about $9 million a year to a wide variety of causes, according to the Washington State Auto Dealers Association. The association itself sponsors an annual college scholarship program for the best student essays on “The American Dream,” and acts as state ambassador for the National Automobile Dealers Charitable Foundation, which gifts emergency medical and economic education organizations as well as private sector colleges and universities.
These figures, in turn, do not include the charitable contributions of an average car dealer’s 50-plus employees. Nor do they measure dealership owners’ impact as private citizens. Walen, for example, is the mayor of Kirkland. Locally owned dealerships play a tremendous role in the community, says Triplett, the Kirkland city manager. “It’s because they live here, they care about the community. We’ve seen huge dividends in the quality of life.”
Back at Porsche Bellevue, Schei, Jones, and Axay Patel consult as workers check wiring, install glass, and check details of the business’ phone and Internet service. Patel is construction and development manager for AutoNation, a Florida business that bought Porsche Bellevue in October along with three other Bellevue dealerships formerly owned by Barrier Motors: Audi, Mercedes-Benz, and Volvo.
“This deal made perfect sense for us,” Patel says as he fields workers’ questions and inspects paperwork. “(The Eastside) is one of the most vibrant communities in the nation. It’s a market we believe in. That’s why we made the investment here.”