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Chicago car dealer's expansion ill timed

The owners, a family long in the business, were committed to the huge project before the auto industry collapsed. Now just surviving will be an accomplishment.

November 28, 2009|By Michael Oneal

Reporting from Chicago — Gary Grossinger was showing a visiting Toyota executive around his cavernous new $37-million "autoplex" this year when, somewhere between the first-floor manicurist and the 100,000-square-foot rooftop parking lot, the slack-jawed executive shot off a question.

"You know the economy just blew up, don't you?" the executive asked.

Grossinger laughed. "Aren't you supposed to be encouraging me?" he replied.

These days, Grossinger needs all the encouragement he can get.

On Aug. 31, amid a crippling auto industry crisis, the 43-year-old, third-generation auto salesman opened the doors on one of the biggest dealerships in the Midwest.

Occupying a full city block, the Grossinger City Autoplex has 400,000 square feet of space on four floors and an inventory of 550 new Toyotas, Scions, Chevrolets and Cadillacs.

There's a cafe, a shoeshine stand, three children's playrooms and laptops with Wi-Fi. There's also a gym and showers for employees.

The only thing missing is a steady stream of customers buying enough cars to make the enormous project pay off.

"In the long run it's going to be great," Grossinger said last week with the air of a farmer hoping for rain. "It's a building process."

Whether he's right will determine whether 115 sales representatives, mechanics and administrators keep their jobs.

"The costs have to match the volume of business," said Chuck Frank, who recently sold several dealerships. "It's a whole different world. I wish him well; I really do."

Grossinger, who with his younger sister Caroline divides responsibility for six family-owned dealerships in the region selling several nameplates, acknowledges that the expansion is ill-timed.

But by the time it was clear in the fall of 2008 that an unprecedented crisis was unfolding, the massive renovation project was almost complete. And with competitors falling by the wayside, the Grossingers lay their bet that a rich opportunity would eventually reward the survivors.

"I could have pulled the plug," said Grossinger, who took over the company with Caroline in 2000 after their father died. "But I chose not to because I really believe in this market."

Grossinger has been trying to build a mega-dealership in the downtown area since his family bought an area Toyota franchise in 1997.

Whether the mega-autoplex is viable, now that it has finally been built, remains to be seen. Grossinger said that, even without much traffic on the GM side, the dealership turned a small profit in October, owing partly to volume from the "cash for clunkers" program. The key revenue driver right now, he said, is parts and service, which typically command margins of up to 50%, industry experts said.

Grossinger has been successful luring Toyota owners who had been taking their cars to the suburbs for warranty work. That helps make up for a lack of new-car buyers, who typically generate margins in the low single digits.

"I still don't sleep well," said Grossinger. "It's been very stressful. Thank God we've had a lot of good years."

Oneal writes for the Chicago Tribune.

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