Burbank Seeks GM Superstore Deal to Boost Car Sales Stake
Months after scoring a deal to bring a Ford superstore to Burbank to swell the city’s sales tax income, city officials are making a play for the next generation in big auto dealerships, this time with General Motors.
GM is now in negotiations to acquire land for a mega-dealership that would serve as the car sales hub of the East San Fernando Valley, city officials said.
Like the 12-acre property acquired in April from the Zero Corp. by Ford Motor Co. and Galpin Ford owner Bert Boeckmann, Burbank officials said General Motors is seeking a location convenient to the Golden State Freeway.
One spot being considered for the new dealership is near the “five points” intersection of Victory and Burbank boulevards, less than a quarter mile from the Boeckmann site, according to several city sources.
A deal for the five-points property, on land currently owned by Burbank and Lockheed Martin Corp., could include as many as 17 acres, officials said.
As part of such a transaction, the city would divert Victory Boulevard several hundred feet so it would join up with Burbank Boulevard to the west of the current intersection, officials said.
In addition to the “five points” site, at least two other properties are being considered, officials said.
Despite criticism that Burbank is taking from its neighbors, the city has made no secret of its intention to compete for a larger slice of the local auto retailing market to boost sales tax receipts.
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Part of that strategy has focused on the new generation of superstores, which offer sales and service in a modern, convenient, freeway-accessible facility.
In its first foray into the auto market, the Burbank City Council voted in January to provide Boeckmann and Ford with a subsidy of up to $12 million, including a $3-million loan and the ability to pocket $9 million in sales taxes over 12 years.
The city in turn estimated it would take in $55 million in sales taxes from the Ford superstore over a 25-year period.
During negotiations, critics called the deal a giveaway to one of the nation’s largest auto dealers and Ford, a company that earned $6 billion last year.
But Boeckmann, a prominent San Fernando Valley businessman and powerful political figure who serves on the Los Angeles Police Commission, said incentives were needed to locate in Burbank because many dealers lose money on new car sales and must make it back in service fees and used-vehicle sales.
Citing the ongoing negotiations, city leaders would not disclose what if any incentives were being offered to GM to locate in Burbank.
General Motors spokeswoman Sharon Sarris would neither confirm nor deny discussions were taking place with the city.
GM’s percentage of the Valley’s new car and truck market has been hovering in the low teens, compared with the low-20% range in all of California and around 30% nationally, Sarris said.
The effort to consolidate Valley dealerships into superstores is part of GM’s effort to boost a flagging market share here, Sarris said. Consolidation efforts have also been undertaken in Denver, Atlanta and the New York metropolitan area since 1995.
“We are trying to consolidate our dealer network in the San Fernando Valley as part of a nationwide program to create a new presence in the marketplace,” Sarris said. “The end result is attractive dealerships located in areas where customers are most likely to shop and where we can institute innovative programs to create better service.”
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Since last year, General Motors has acquired eight dealerships--representing 12 franchises--in the Valley, which will be shut down or incorporated into the mega-dealership, Sarris said. Wes Rydell, one of the company’s most successful Midwest car dealers, was named to head the network.
Rydell, who started with one dealership in North Dakota, runs 30 facilities across Wisconsin, Minnesota, Iowa, Nebraska, North Dakota and South Dakota, according to Sarris.
Sarris called the streamlining of GM’s dealerships “a multi-step process” that has just begun.
