When Ray Ciccolo moves his Porsche dealership into a new building in Norwell, Mass., this summer, he expects an extra $1,000 to $1,500 per vehicle in profits and, he hopes, more sales, too.
"You get a significant amount of back-end money" per vehicle sold for having a dealership that meets Porsche's design requirements, Ciccolo said. "In order to be competitive with your local Porsche dealer, you simply have to have a brand new facility so it can be compliant."
Ciccolo's suburban Boston store is one of around 150 U.S. Porsche dealerships, out of 189, renovating or expanding as the brand's sales have soared. Porsche Cars North America wants additional showroom and service space from dealers to accommodate the growing number of nameplates in its lineup and the additional vehicles on the road. Now Porsche is dangling extra vehicle allocations to entice more dealers to commit to a project, COO Joe Lawrence said.
"More than half the network is upgrading their facility in some significant way," Lawrence said. But "there are others we are still working with. We still have some way to go with some."
Porsche executives expect 40 to 50 new or renovated facilities to open this year alone. More than 60 projects are actively under way. Lawrence declined to say how many remaining dealerships are being asked to commit to an upgrade.
Dealerships meeting Porsche's corporate identity standards already get a per-vehicle performance bonus, a company spokesman said. He declined to specify the amount.
Late last year, Porsche told its dealers they would be eligible for extra vehicle allocations if they expand to meet the brand's requirements for showroom capacity and shop size, plus satisfy other, more stringent, facility standards.
While he didn't want to share "the gory details," Lawrence said dealers meeting those requirements would get "an additional balanced mix of products." The extra allocation will go to both dealers completing new projects and those that have already expanded to meet the standards.
"We feel like it will help them make the business decision for themselves that it makes sense to expand," Lawrence said.
Most already are convinced, he said. Porsche's sales have more than doubled since 2009. The brand sold 47,007 vehicles in the U.S. in 2014, up 11 percent.
The around 150 dealership projects date back to 2012 and include finished stores, renovations under construction and those in the planning stages, said Lawrence.
With much of Porsche's lineup in short supply, the bonus allocation is a tasty carrot for dealers.
Ciccolo said he isn't getting the extra allocation yet but is eager to get it. He aims to finish his new Porsche store by July 1, though he pointed out that construction has been tough of late in the snow-socked Boston area. Crews have had to move a lot of snow to keep the work going.
His Porsche operations had been sharing a building with Audi; Ciccolo is building new stores for each. He estimated the cost of the Porsche project at $3 million to $4 million. He is going from about 4,000 square feet for Porsche to 15,000 square feet and plans to hire more salespeople and technicians.
Once he opens the new dealership, Ciccolo expects sales could roughly double to 20 new Porsches monthly, up from 10 to 12 now. Porsche's growing sales and new products, particularly the Macan crossover, justify his investment, he said. Porsche still was mostly a sports-car business when he bought the store in 2008, Ciccolo said.
"The future is very, very bright," he said. "What they were developing is a 12-month business. [The new vehicles] give us 12 months of service and back-end operations, and it will give us 12 months of sales."
