Jonathan Chariff is investing big in Florida right now, having knocked down two auto dealerships in Miami to clear the way for a $40-million project that will construct new showrooms for the BMW and Honda franchises owned by his South Motors Auto Group in Florida.
But he’s not just investing in the highly touted economic future of Florida, as early lifting of Covid restrictions, immigration of Northeasterners and a generally friendly consumer attitude toward automobiles have created a narrative of great optimism for future car sales in the Sunshine State.
Chariff also is betting heavily on the continued role of traditional, bricks-and-mortar dealerships in the future of automotive sales and service for his company, which has 10 rooftops in Florida, also retailing Ford, Infiniti, Mini and Volkswagen. This at a time when the movement of consumer research and purchases online has been presaged to mean the end of car showrooms. Meanwhile, there’s the well-telegraphed rise of electric vehicles, which require less service than gasoline-powered vehicles.
“We’re ramping up for traditional business as well as for online and customer convenience when customers don’t come into the showroom,” Chariff told Chief Executive. “We want to have adaptability. We haven’t seen the change [to e-commerce] to the extent the press may have. But we are putting in more tools so we will be better at it.”
Chariff conceded many consumers, typically younger ones, are happy conducting all of their research on an auto purchase or lease online, particularly when they’re making a simple upgrade to a new model of the same vehicle.
“But when something is new and different, they visit the showroom to see it,” he said. Financing requirements for in-person signatures also continue to bring buyers to physical dealerships. And auto brands continue to demand the same level of significant investment in physical dealerships to meet their franchisee requirements—for attractiveness, space and amenities—as five years ago, he said.
Auto manufacturers “haven’t come around to recognize that smaller showrooms will be able to allow you to do the same amount of business and still adapt for the future,” Chariff said. “That definitely has an impact on the size we need to build.”
Further, it’s well understood in the car-retailing industry that all-electric vehicles, whenever they become mainstream, will require much less space for repair people to work than gasoline-powered vehicles do. But in the meantime, service departments repairing new and existing vehicles continue to provide the vast majority of profits for U.S. dealerships, so Chariff’s new BMW and Honda stores will reflect a continuing commitment to that technology.
“The life cycle of a vehicle is 14 years,” he said. And auto manufacturers’ stated commitments to convert their fleets to electricity don’t have them counting on significant EV sales for another five to 15 years. “Still, we’re building all our facilities to be able to handle 100% EV business in the future, including charging stations in all of our service stalls.”
Among the biggest continuing issues for U.S. car dealers such as Chariff is how to help purchasers of vehicles, especially luxury brands, understand operation of the increasing number of connectivity features and digital systems for commanding basic functions from audio to climate. Over the past several years, BMW, Lexus and other premium brands have required their American dealers to invest heavily in on-premise resources to help teach purchasers how to operate those systems, including the creation of Apple-style “genius bars,” special training for designated tech reps, and even weekend classes for new owners.
“The most important thing about our customers is keeping them in the dealership, allowing them to feel at home there and wanting to come back,” Chariff said. “Our goal is to make them customers for life.”