Auto dealerships try new lures

It's not your father's automobile dealership.

Today, Krenzen Honda of Duluth will open a new stand-alone showroom and service center that serves Caribou Coffee and offers free wireless Internet access in addition to deals on vehicles.

"Instead of being simply a place to buy a car, we want this to be a place where people go to have a car-buying experience like nowhere else," said Scott Krenzen, the dealership's co-owner.

The two-story, 30,000-square-foot Honda dealership is on Haines Road, next to its former home, Krenzen Indoors, which will continue to carry the Cadillac, Pontiac, Nissan, Lincoln and Mercury lines. The new facility has 16 vehicle service bays -- 33 percent more than Krenzen Indoors. This capacity should help shorten customer waits, Krenzen said.

For those customers who don't want to wait on-site, loaner cars and shuttle service will be provided.

Scott Krenzen would not disclose the cost of the project, but permits issued for it peg the building's value at more than $2.4 million. That doesn't include the cost of furnishings and service equipment.

Krenzen isn't the first Northland dealership to seek distinction by offering customers over-the-top service and catering to their creature comforts.

When NorthStar Ford opened its new dealership next to Miller Hill Mall almost six years ago, it toofeatured a cafe, wireless Internet access and shuttle service to neighboring businesses.

Other Northland auto dealerships, including Kolar Auto World of Duluth, offer gourmet coffee, concessions and Internet access at their operations to make waiting customers more at home.

David Solon, general manager at Kolar, said his business probably logs about 2,000 miles each week shuttling customers to various destinations as they wait for their vehicles to be serviced. These customers are issued cell phones so they can check on the status of their vehicles and request a return ride when finished with errands.

"No one's happy when their car breaks down. We're a very car-dependent society," Solon said. "But our job is to make every visit as pleasurable as possible."

That includes catering to children. Kolar has playtables, puzzles and coloring books on hand to keep youngsters occupied.

As customers wait for a car to be serviced at Krenzen's new facility, they can sink into a fireside lounge chair and check their e-mail via laptop or kick back and watch a wide-screen TV.

"If people are here to get their car repaired, why not make the place where they wait comfortable and inviting?" Krenzen said.

The new Honda facility also is devoid of traditional offices. Instead, negotiations with customers take place in open consulting areas.

"This new facility breaks all the old-fashioned rules for car buying and selling," Krenzen said.

Many dealerships across the state have redesigned their facilities and beefed up amenities during the past few years, said Scott Lambert, executive vice president of the Minnesota Auto Dealers Association, based in West St. Paul.

"People have been working to make their dealerships more of a destination that people would look forward to visiting," Lambert said.

"The idea of making customers' stays more entertaining and more productive has really caught on," said Paul Taylor, chief economist for the National Auto Dealers Association in McLean, Va., describing the rapid proliferation of big-screen TVs and Internet access at dealerships during the past five years. He said that in some larger markets, dealers have installed putting greens and elaborate playrooms for children.

Solon said he has heard of some larger metro dealerships offering manicures to customers while they wait for their vehicles to be serviced.

"There's a tremendous amount of competition out there," Taylor said. "And people are doing these things because they want to attract more customers."

But Lambert said tough times in the auto industry of late may have slowed the rate of investment in dealership improvements.

"It's a tough time to be putting money into your store right now," he said.

Taylor confirmed that car dealerships appear to be coming off a difficult 2006. The latest data shows that as a group, dealers nationwide posted a net profit of 1.7 percent through October 2006 versus 1.9 percent for the same period in 2005.

"It's not practical for everyone to make these kinds of investments," Lambert said. "It's simply not appropriate for some markets."

Still, Taylor predicts dealerships will continue to improve their facilities for fear of falling behind the competition.

PETER PASSI covers business and development. He can be reached weekdays at (218) 279-5526 or by e-mail at ppassi@duluthnews.com .