Separate showrooms boost Lincoln sales in down year

The December grand opening at Lincoln of Cutler Bay, set in a swanky neighborhood south of Miami, had all the trappings of a high-class celebration.

Models in sparkling dresses and feathered outfits welcomed dozens of guests in the two-story, 65,000-square-foot glass-walled store. There was live music, an ice sculpture and a ceremonial ribbon-cutting featuring the luxury brand's top executives. Only the face masks required for all attendees served as a reminder that times weren't normal.

The dealership was one of 23 new Lincoln stores to open in 2020 amid the coronavirus pandemic, part of the brand's push to persuade retailers in the nation's top 30 luxury markets to build standalone "vitrine" showrooms.

While the dealers who opened last year committed well before the virus arrived, they now face the reality that their multimillion-dollar investment in brick and mortar may take longer to pay off than anticipated as customers stay home and sales increasingly go digital.

Still, those dealers are optimistic that shoppers eventually will resume pre-pandemic buying habits once the virus fades, and brand executives point to sales gains for the newest stores as proof that the investments are bearing fruit despite the pandemic. Lincoln says retail sales at new brand-exclusive dealerships rose about 25 percent last year vs. a 0.5 percent retail decline for Lincoln overall.

"I think I'm doing the right thing based on the customer and the market," Luis Somoano, dealer principal of the three-store Doral Automotive Group that includes Lincoln of Cutler Bay, told Automotive News.

"Eventually we'll go back to certain levels of normality. A lot of people prefer the online business and that will grow over the years, but I feel that in order to compete in this market and really conquest from Lexus or Land Rover, I needed this kind of investment in my facility," he said.

Somoano invested nearly $23 million in his store, which sits next to the Ronald Reagan Turnpike and down the road from a number of other luxury dealerships.

Early indications are that the customers who buy from that store tend to get higher-end trims than at his other Lincoln location, Somoano said.

He says the larger layout, featuring living room-like waiting areas and an indoor waterfall-like feature, is appealing to shoppers in an era of social distancing.

"Space matters, especially now," he said. "People don't want to be near each other."

Although some dealers across the country put off facility upgrades last year because of the pandemic, a Lincoln spokeswoman said the brand was not aware of any dealers who canceled construction for that reason.

That's likely a result, in part, of changes Lincoln made after facing initial backlash to the program in 2019.

After listening to feedback, Lincoln changed the program to let dealers build different-size showrooms, such a small boutique, regardless of market size. The brand also reduced the margin withheld from dealers who don't separate their dualed Lincoln and Ford stores.

While some dealer groups expressed concern and the state franchised dealer association in New Jersey sued the brand over the facility program, Lincoln President Joy Falotico said she has received positive feedback to the recent changes.

In addition to the 23 stores that opened last year, Falotico said 11 more vitrine showrooms are on track to open in 2021 and more than 40 are scheduled to open in 2022.

Falotico doesn't expect any long-term disadvantage from investing in physical storefronts even as digital retailing grows.

"We still see with these luxury clients that they want an experience and want to come see the vehicle, but they want to do it on their own terms," she said. "Maybe the paperwork they want to do online, but they want to come kick the tire to a degree as well."

West Point Automotive opened a new Lincoln store in Sugar Land, Texas, in November 2019, months before the virus started to surge in the U.S.

The 27,000-square-foot facility, which includes a full service center and four-car showroom, was built on what used to be a Lincoln-Mercury dealership that closed in 2011.

General Manager Chris Poulos admitted the virus has been challenging for the new store but said sales last year were roughly in line with what he expected.

The store, classified as an essential business, was able to remain open throughout 2020 and has implemented strict mask-wearing policies and sanitation requirements. Poulos said at no point last year did he ever second-guess the decision to invest in a new location.

"There's a pretty big cross section of people that still want to do business in person," he said.

"Even with the pandemic, we do our due diligence and mask up, and clients are very comfortable coming to our store."