News, Real Estate

EAGERS Automotive is moving eight of its high-volume franchise showrooms in Perth’s busy car corridor, leaving behind millions of dollars worth of real estate and buildings up for grabs by other car retailers or other industries.The high profile sites in the northern suburb of Osborne Park are predominantly on the busy Scarborough Beach Road thoroughfare, noted for its dozens of new-car showrooms from lower-priced brands through to Lamborghini and Ferrari.

It will end lease deals by Eagers on the sites and, according to Eagers’ COO Edward Geschke, will save the company $3.4 million a year in lease and associated property costs, including amortisation of leasehold improvements, rates and outgoings.

He said the seven leases (with eight franchises) in Osborne Park cost Eagers $7.9 million a year in leases. “This new structure in Osborne Park costs us $4.5 million a year, so it’s a big saving,” he said.

Mr Geschke, speaking to GoAutoNews Premium, said the closures of the leased showrooms – including Ford, Nissan, Mitsubishi, Jeep and BYD – would be replaced by a new AutoMall complex which is close to completion on Scarborough Beach Road.

The complex, alongside the northern freeway and abutting the rail line and train station, covers 21,000 square metres and replaces the eight showrooms that have a total coverage of 45,000 square metres.

It is being built on the former North City Holden site, transitioning the property that had one franchise into an area that will now hold eight.

North City Holden was part of AHG Ltd before it was bought by Eagers Automotive (then AP Eagers). The land was owned by interests associated with a former AHG director and has recently been bought by Eagers.

“One of the reasons that the site appealed to us was its location alongside the train stations, bus stations, and other services,” Mr Geschke said.

“Within the Perth precinct, Scarborough Beach Road is an important road.

“In addition to the showrooms, we have 20 EV charging stations and will have a cafe. The (Stirling City) council is very keen to make sure that a cafe was incorporated to encourage the community into the area.”

Eagers has designed the AutoMall to have a fascia of showrooms and then behind, locate the central service centre for all the brands.

Asked about a location for used cars, Mr Geschke said these cars would be moved to one of Eagers’ easyauto123 used vehicle warehouses.

“The new showrooms take up the area that was previously allocated to used cars,” he said.

“If we had a traditional dealership, there would be used cars out the back. Now we have a purpose built, large-scale workshop that will accommodate servicing, and, in some cases, pre-delivery of vehicles.

“And the used cars are not sold from the location. The only exceptions could be demonstrators or special-edition used cars, but not a seven or 10-year old car, for example.”

Mr Geschke said the Osborne Park AutoMall had been in development since 2020 and now says that more of the same is coming to other cities, including Melbourne and Newcastle.

“It has been through quite a few different iterations over time,” he said.

Edward Geschke

“This is not something that OEMs are used to doing. They had to be taken on the journey as well as to what we were creating and how their brands will benefit from what we are creating. 

“I have to tell you that the brands have just been fantastic. They’ve all been innovative, they’ve all been thinking about things differently, how their brands can evolve within the guidelines that they have, which are obviously global standards. 

“And they’re all really excited about it, even though it has been at least four years in the making.

Mr Geschke said the move is all part of Eagers 100 year strategy. “There are a few components to this strategy and one is to ensure we engage our customers everywhere,” he said. 

“By that we mean that we engage our customers in environments like the AutoMalls that become customer centric locations. These locations are much more accessible to customers and make it easier for them to engage with brands.

“Previously, customers may go to a site that might be 6000 square metres and on it is one franchise. So it’s not easy to compare one brand’s products with another brand’s products.

“AutoMalls allow customers to wander between brands to compare products.

“There are other benefits. Customers find it easier to drive to a single location, park their car and look at new cars. Our staff benefit because the AutoMalls are state-of-the-art facilities.

“These locations also allow us to centralise back-end administration functions, so we get a lot of scale from having eight franchises in one location.

“Then there’s the way we can offer all this at a lower cost base. Ultimately, if we can create a better customer experience that our employees like to be involved in, and do it for less cost than we are currently spending, then, we’re on to a winner.”

Mr Geschke said Eagers would choose between opening greenfields sites such as Osborne Park, and incorporating the showrooms within an existing structure, as with the AutoMall in Brisbane’s Indooroopilly shopping centre.

“We are still open to shopping centre locations,” he said.

“I guess the inhibitor is just whether we have a prominent enough shopping centre in a PMA to make available all the brands.

“That’s rare: Having enough brands in one PMA; and where there’s a big shopping centre available.

“In the future there will be examples of the Osborne Park AutoMall and also examples of the shopping centre concept.

“It is about finding a more efficient use of property than what we have currently.”

Mr Geschke said Eagers now owned $716 million worth of property but it uses property valued at $2.5 billion.

“Essentially, we own 25 per cent of the land that we use. So we still have an enormous amount of leased property.”

He added that the AutoMall concept had attracted international interest and it was being used as an example globally as to how automotive retail may evolve.

By Neil Dowling

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