The new Acura location at 401 S. Hope Ave. is one of the major developments within Santa Barbara’s new car dealers this year, an area that usually has little changeover but brings a sizable amount of sales tax income to the city.
With Acura coming as soon as this week, and Lexus added earlier this year, Santa Barbara dealers hope to bring more northern Santa Barbara County and San Luis Obispo County customers to town, too.
Duane Sanders, general manager of the Santa Barbara Auto Group, said a principal partner of the dealership has been involved with Acura since the 1980s before buying Cutter Motors in 2004 and turning it into the current Auto Group.
“He’s been talking to Acura for eight years to come to Santa Barbara,” Sanders said. “It probably really became a hot topic in the last 12 to 18 months as the economy improved.”
Sanders said there are as many as 1,400 Acura owners in the Santa Barbara area, and there could be more potential customers interested in the brand if it had a local franchise.
Gold Coast Acura in Ventura has been serving the brand’s customers since 1986. To the north, the next closest dealership is in Seaside.
“We have some new product coming out as we speak, and we feel we’re a good fit for Santa Barbara,” said Ron Jones, zone representative for Acura’s dealer development. “We are one of the few near-luxury makes that is not in Santa Barbara.”
Jones said Acura has wanted a dealership in Santa Barbara for years, but plans were put on hold after the industry’s downturn in 2008. Plans were further held up last year after the Japanese tsunami that caused parts shortages for many automakers.
Acura’s line of luxury cars and SUVs fits in with other Santa Barbara Auto Group offerings, such as competitors Audi, BMW and Mercedes-Benz.
Sanders said BMW and Mercedes sell more than 300 units a year, with Audi around 140. He said he expects Acura Santa Barbara to move around 250 new vehicles in a full year. Jones thinks the area could sustain up to 350 new Acuras a year.
Jones said the $44,000 MDX three-row SUV is the company’s best-seller, although the new $35,000 RDX — which competes with the Audi Q5 and BMW X3 — is selling quickly. The new ILX, a compact sedan starting around $26,000, also offers a hybrid version. Acura also makes a wagon, the $32,000 TSX Sportwagon.
“I was told the Santa Barbara market likes wagons,” Jones said.
Jones said he wasn’t concerned about having competitors such as Audi and BMW be part of the same Auto Group, but said Acura generally prefers dealers to set up standalone showrooms.
“In Santa Barbara, we realize real estate is expensive and not abundant, and the city doesn’t have a lot of property for auto dealers,” Jones said.
Those were the same circumstances that helped doom Hyundai Santa Barbara, the franchise Santa Barbara Auto Group dropped at the end of July. It was located on South Hope Avenue where Acura will now fit in.
“We worked for three to four months to relocate Hyundai to a place that made sense, but we weren’t able to find an affordable place to move it,” Sanders said. “There was a local dealer who wanted to be a Hyundai dealer, but Hyundai rejected their application. So at the eleventh hour, we had to give it up.”
Santa Barbara Auto Group acquired the Hyundai franchise in November 2010 and moved it into a showroom alongside Jaguar, Land Rover and Smart.
Hyundai cars and SUVs were sold through Santa Barbara Chrysler Jeep Dodge starting in January 2009, but the dealership folded in 2010 after owner Jim Crook was unable to obtain financing to keep ordering new cars. A deal between Crook and Ventura auto dealer Leo Bunnin to sell the dealership also failed.
“Santa Barbara is very important to us; we’re interested in being represented there with the right dealer and the right location,” John Trainor, a representative with Orange County-based Hyundai Motor America, said recently. “We have dealerships in Oxnard and Santa Maria and hope that can sustain us for now.”
Companies such as Lexus, which opened in March at 350 Hitchcock Way in Santa Barbara, require dedicated facilities, and Jones said it’s hard to be profitable with high rents by not sharing some dealership space.
Sally Smeed, DCH Lexus of Santa Barbara’s assistant general manager, said business there is growing.
“They’re not meeting my high expectations, but they’re steadily improving,” she said.
But DCH Lexus is attracting a lot of customers who had to drive to the dealership’s Oxnard location for service. It’s also getting customers who bought a competing brand because there was no Lexus dealership in Santa Barbara.
“At least half of the business we have in the sales department is from people who bought something else because there wasn’t a sales point here,” Smeed said.
Smeed said the Santa Barbara dealer sells about as many new cars as used ones.
“We’d prefer to sell more new cars than used, but when the market changed three years ago, the used car became more important to dealerships.”
Next to the Lexus facility, there’s still half of the old Mel Clayton Ford site up for lease. It’s the last space for lease within the city’s auto center.
Stephen Leider of Lee & Associates said a number of parties remain interested in the 118,480 square foot-site, but he couldn’t speak about potential bidders.
Even if there was a business ready to sign the lease, Leider said, the buildings there aren’t move-in ready.
“It would take considerable investment to get a business running in there,” Leider said.
Further down Hitchcock Way, Perry Ford Mazda dropped Lincoln from its name at the end of February. General Manager Walter Alfaro said Ford Motor Company offered compensation if Perry relinquished its Santa Barbara Lincoln franchise, but wasn’t forcing them to drop it, either. Lincolns have been sold at 440 Hitchcock for more than two decades.
“We chose to drop it because we’ve had seen an influx of Lincoln customers decide to buy a Ford instead since we added Ford in 2007,” Alfaro said, adding that many Ford models sticker for more than $50,000 or about what most Lincoln customers were paying.
Lincoln sales made up less than 10 percent of Perry’s Santa Barbara sales, Alfaro said, with Mazda at 30 to 35 percent.
Perry Santa Barbara remains a Lincoln service outlet, and the firm’s Lincoln store in San Luis Obispo gives them ready access to parts, Alfaro said. He said Perry has no plans to end Lincoln sales there.
Alfaro said Lincoln sales could return to Santa Barbara if customer demand warrants it.