Then there's Phoenix
Photo credit: CHARLIE LEIGHT
Case in point: Avondale, Ariz. The community on the western fringe of Phoenix has 60,000 residents. Its population is expected to double in 15 years.
Avondale's close enough to Phoenix that its dealerships attract sales leads from the metropolitan area's 3 million residents. An auto mall in Avondale has 14 franchises.
"The number of new homes that are being built, and the number of people moving in, is a little scary," says Jeff Fairman, who directs Avondale's economic development department.
"New families, new houses, new cars all go together."
Last year, the Avondale auto mall accounted for 16 percent of Avondale's sales-tax receipts, Fairman says.
Because of continued sprawl in the Phoenix area, building a dealership in Avondale may not be a sure recipe for long-term success. It could cool off like Phoenix's East Valley, from where many dealerships moved to Avondale.
"The challenge for survival will be greatest among the lower-volume dealers in competitive suburban markets," says Steve Goodall, president of J.D. Power and Associates.
Too many import stores
Mitch Pierce co-owns Nissan and Toyota dealerships in Avondale.
He says some import brands are putting too many dealers in the Phoenix area.
"There's a small import manufacturer that has four dealerships in Phoenix," says Pierce, who declined to identify the company.
"Each of the dealers sells just 100 new cars a year, and they still want to add a fifth point. And they want exclusives. Is that good for dealers? Is that good for the manufacturer?"
Twenty miles to the north, in the town of Surprise, former Ford Motor Co. executive Steve Lyons plans to open a Ford dealership - the 10th Ford store in the Phoenix area.
In contrast, there are about 30 Ford dealerships in metropolitan Detroit.
Despite Phoenix's rapid growth, Lyons says he doesn't expect Ford to get reckless in the market.
"The way we've set it up, I don't think there ever will be a dealer within 10 miles of me," Lyons says.
"And that's the right thing to do for everybody."
Amy Wilson contributed to this report
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