Leonard Freed gave a quick "no, thank you" a year ago when he received an inquiry about selling his family-owned dealership, Town Motors Chrysler-Jeep, in Exton, Pa.
But the 73-year-old Freed later changed his mind. He did a three-way deal that illustrates two national buy/sell trends: the transfer of real estate used for Detroit 3 dealerships to import franchise-holders and the consolidation of Chrysler LLC stores.
Freed's father, Maurice, opened his first Chrysler dealership in Downingtown, Pa., in 1941. At one point, the family owned four stores in communities southwest of Philadelphia. Leonard and his four brothers grew up in the business.
"I was approached in 2006 by Rich Weitzman of Staubach Retail Services," says Freed, who with his son, Maury, and nephew, Jay, was running Town Motors Chrysler-Jeep. "He was interested in the real estate for another dealership."
The other dealership was Otto's BMW in West Chester, Pa., a 40-year-old store that had outgrown a recent update and urgently needed more space for service.
Michael Vadasz, the principal at Otto's BMW, says he had rejected the idea of selling the West Chester store and building a dealership. Much of his customer base is in the immediate area and in Exton, 10 miles away. So he decided to look for a second site in the area. He began talking with the Staubach people as early as 2005.
Exton had a population of about 4,300 in the 2000 census and an estimated median household income of $76,000 in 2005. Freed describes it as an "affluent, white-collar area with zero unemployment." It seemed a perfect fit for a companion BMW store for Otto's BMW.
In 2006, Freed says, selling his business was "the farthest thing" from his mind. But he asked: Was the 36,000-square-foot dealership on 7.5 acres of land more valuable than the Chrysler-Jeep franchises?
Freed knew that Chrysler was interested in full-line, or Project Alpha, retail operations in which Chrysler, Dodge and Jeep franchises are in the same location. And Jeff D'Ambrosio Dodge in nearby Downingtown had recently completed a new store. So a three-way deal began to take shape.
This fall Freed transferred his Chrysler and Jeep franchises and sold his new-car inventory to the D'Ambrosio operation and sold his building and land to Otto's BMW.
Vadasz says the new store will be a full-service companion to his existing BMW store. He is keen to have the 18 work stations at the former Town Motors. Otto's operates 22 lifts in West Chester. BMW figures Vadasz needs as many as 45 service bays for a large and growing customer base. Otto's sells more than 2,000 new and certified pre-owned vehicles a year.
"We're doing some minor modifications in Exton now and plan to open there within the next 90 days," Vadasz says.
"Hopefully a completely new facility will be erected within the next three years." c