Subaru dealership opens on Burlingame's Auto Row (by Christine Morente, San Mateo County Times)
BURLINGAME Bucking the trend of car dealerships across the country closing or struggling to survive, the Putnam Automotive group opened a new Subaru dealership Thursday on the city's famed Auto Row.
As soon as its doors opened, Putnam Subaru at 85 California Drive sold a Forester off the lot, said Kent Putnam of Putnam Automotive. "Subaru sales are up 5 percent year-to-year while the industry as a whole is down 30 percent," the 44-year-old said. "Subaru doesn't do gimmicks. It's a product with good value."
Putnam also owns Volvo, Toyota and Mazda dealerships, while his father, Joe Putnam, owns Scion, GM, Chevrolet, Buick, GMC, Hummer and Cadillac dealerships all of them on California Drive.
About 960 U.S. car dealerships closed in 2008 while approximately 200 opened, for a net loss of roughly 760 dealers, according to the National Automobile Dealership Association.
Paul Taylor, chief economist for the National Automobile Dealers Association, said it makes sense that Burlingame's new dealership is selling Subarus. "They are going against the grain, but they do have the important trend going in their direction, which is that Subaru's sales are actually up a little over the last year, as opposed to most makes, which are down 30 percent or more," Taylor said. Taylor said Subaru and Hyundai are the two major manufacturers that have seen year-to-date improvements in new car sales. Subaru's new-car sales are up 1.6 percent for the period from January through March over that period in 2008, he said.
Hard times for auto dealers have mirrored those for the economy and the automobile industry as a whole. Franchised new car dealers nationwide sold 13.2 million units in 2008, which was down 18 percent from 2007, according to the association. Taylor predicts that sales will be down further in 2009, with roughly 11 million units sold, and that's only if signs of strength since January continue.
The Bay Area has seen its share of closures. Four GMC Pontiac Buick dealerships in Colma, Dublin, Newark and San Jose shut their doors earlier this year. A new Toyota Scion dealership in Oakland, which had held its grand opening last fall, abruptly closed in March, having lost its corporate funding.
Dealerships have had to come up with creative ways to remain profitable. Last month, the city of Tracy got in on the promotion game when the mayor floated a proposal to offer $500 gift cards to anyone who purchases a vehicle in Tracy. Among the few positive developments locally was last year's opening of a new Tesla Motors showroom in Menlo Park. The startup electric-car manufacturer has yet to turn a profit, however.
Kent Putnam said his new business will generate about $10,000 a month in city sales taxes.
"I think people who have been driving a Beemer or a Benz are maybe not making as much money now but they still want a high quality car," said Putnam referring to the consistent uptick in sales. "Every single car (under the brand) has been recommended by Consumer Reports."
Patricia Love, Burlingame's economic development specialist, hopes it will spur others to open up shop if they have the green. "They did their math, they did their research, and they're taking the risk and starting a new business," she said Friday. "That's what's going to build consumer confidence and help take us out of the recession we've been in."
The closest Subaru dealership is in Redwood City. It's competition, but Putnam said he's not worried. "This has been an auto row since the 1920s," said Putnam, who sat in his office overlooking California Drive. "People on the Peninsula know this is where the car dealers are."
Despite the new dealership, automobile sales tax revenue is expected to continue dropping in Burlingame, said Love.
In the third quarter of 2008, car sales tax revenue was $687,000, representing 33.8 percent of the city's sales tax revenue. In the third quarter of 2006, car sales amounted to 42 percent, or $922,441 in revenue.
- Written by Fiona
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