How Roger Penske revived a 7-story downtown SF jewel
Roger Penske's opening of a seven-story auto dealership in downtown San Francisco last month was a daring step for the global industry magnate.
|The Penske dealerships in San Francisco|
San Francisco leans left and buys green. And for 40 years, its consumers have shopped for cars and trucks in the suburbs.
But Penske, seeing opportunity downtown, put a combined Nissan and Infiniti dealership into an abandoned building that was arguably the jewel of the city's one-time auto row.
But the 75-year-old auto retailing, racing and truck leasing mogul was not the only powerful mover and shaker behind the new store. Before he could think of doing it, he first had to win the favor and approval of Mrs. Brooks.
Marie Brooks, the grande dame of San Francisco auto retailing, is elegant and dark-haired at age 86, respectfully referred to as "Mrs. Brooks" by auto industry executives. Hers is a life story that intertwines the history of the car business and the history of one of America's biggest retail markets.
She is the former owner of Ellis Brooks Chevrolet and one of the first female franchised auto dealers in America, and now reports for work daily at her Ellis Brooks Automotive Center used-car lot in downtown San Francisco. She operates a leasing company, owns a Honda store in Yreka, in far northern California, and is a franchisee of the Wheego electric car startup.
More to the point for Penske, she owns the building at the corner of Van Ness Avenue and Bush Street that he needed to make his daring deal pencil out. And it was never a sure bet that she would let him rent it.
How his Penske Automotive Group, with $11.6 billion in auto retail revenues, won over Mrs. Brooks, put the deal together, bucked the historical direction of the local market and worked with Nissan North America to fit its factory real estate specs onto a piece of historic urban real estate is a story of what Roger Penske is famous for: attention to detail.
"San Francisco is not the real world," observes Peter Blackstock, a Toyota and Lexus dealer in the region's Monterey peninsula, and also the northern California representative for the National Automobile Dealers Association. "It's a very political and liberal city, and just a very challenging place to do business. People don't buy cars there the way they do in other cities.
"Hats off to Roger Penske for figuring out how to make it work." The deal managed to satisfy people on all sides.
For Penske, CEO over a galaxy of 335 dealerships in the United States and Europe, it was the opportunity to sink his flag into ground zero of northern California's import-dominated market with a high-profile image store.
For Nissan, it is the correction of a market-representation gaffe: The brand has had no store in expensive San Francisco proper for six years. For Infiniti, it represents expanded U.S. distribution, an added store in an upscale luxury market long dominated by BMW and Mercedes-Benz. Penske's store will be the new showcase for the electric vehicles that Nissan and Infiniti are introducing -- a big historic building, visible day and night to highway commuters and residents in a market that may be the greenest and most EV-friendly of any urban center in America.
Toyota owns San Francisco at the moment. Toyota enjoys more than a 21 percent share of vehicle registrations, according to data from Polk, a share swollen with sales of the hybrid Prius. Thanks to San Francisco sales, the Prius is the second-best-selling vehicle in California, handily outselling Toyota Camrys and Ford pickups. Notably, San Francisco is also Nissan's biggest market for the all-electric Leaf -- even though buyers must travel outside the city to find a Nissan store for sales and service.
This is the hot spot where Nissan has been absent as it hustles to build U.S. market share. It is why Brian Carolin, Nissan North America senior vice president for sales and marketing, approached Penske to make something happen in San Francisco. And it is why Penske responded to the call.
When it came to Mrs. Brooks, now the dealership's landlord, the Penske deal had a completely different significance. All she wanted, she says, was somebody in her big downtown dealership building that was worthy of its image.
"A number of people had approached me over the years. And I just wasn't sure what was best," she says. One of them was the Whole Foods grocery chain. "I guess I'm just old enough and eccentric enough that I could think about what I'd like to see happen to that building and to that neighborhood."
"That neighborhood" is the storied old auto row of a glamorous city, and Brooks remembers it well. She arrived a young woman from Arkansas in 1946, taking a job as a switchboard operator for the city's independent Hudson distributor. After 30 days, she gave notice, confessing she hated the work, but instead was promoted to be a low-paid "contract girl" -- the old auto retailing job that has since morphed into big-paying F&I manager.
Through the course of her years in the neighborhood, she became "Mrs. Brooks" -- the young wife of San Francisco's prosperous Hudson and Chevrolet dealer Ellis Brooks. Their store at Van Ness and Bush was a downtown landmark for decades, with the dealer's name on the roof in neon and visible for miles. Brooks further burned his name into local consumers' minds with radio spots that pilfered the legendary Dinah Shore Chevy jingle, "See the U.S.A. in your Chevrolet," changing the lyrics to: "See Ellis Brooks today for your Chevrolet, corner of Bush and Van Ness."
Downtown San Francisco teemed with auto retailers and floor traffic in the 1940s, '50s and '60s. Customers could stroll along Van Ness from showroom to showroom, and surburbanites drove into town to kick tires and buy their cars, or take an elevator ride to Brooks' open-aired rooftop where new cars were parked. Six competing Chevy stores operated in close proximity, more like multiple Starbucks locations than auto franchises today. Also nearby were three Pontiac stores, three Oldsmobile dealerships and five Ford stores.
"It was thrilling competition," Brooks recalls. "And you had to market yourself constantly and find new ways to bring in customers. You didn't dare take your eyes off the business."
Inside the Brooks building, management sat on the mezzanine level overlooking the showroom to keep customers in sight at all times. The dealership sold around 3,000 new cars a year.
But in 1963, Brooks became ill and died. While raising three young children, Marie Brooks stepped in to do his job. She was not the designated dealer principal at first, but largely out of respect for her late husband, General Motors turned a blind eye to the unofficial succession. She was vaguely aware of only one other woman dealer in the country at the time, Denver Ford dealer Edwina Nichols.
GM eventually embraced the widow as a full-fledged dealer principal and added Cadillac to her portfolio. She thrived for the next four decades.
"But I chose to keep a very low profile," she admits. "During the women's movement, a lot of women asked me why I wasn't more out front and open about what I was doing in business. I felt it was more prudent not to draw a lot of attention to myself."
By the time of the national financial crisis in 2008, her outlook had changed for the worse. Only the Chevy franchise remained. Instead of selling 3,000 new cars annually, Brooks retailed fewer than 600 in 2006, fewer than 400 in 2007 and around 250 in 2008.
Coincidental to the dwindling business, her unionized work force shared a pension fund with other auto companies in the city that had a growing funding problem. Brooks' bill to keep the pension funded was more or less doubling every year. In 2008, it came to more than $3 million. In 2009, she expected, it would likely be $6 million.
The Chevrolet dealership closed in 2008, while Brooks continued on there as a used-car dealer. She later relocated that operation down the street, leaving the historic building empty.
Within a year, San Francisco's last remaining Ford store also closed, leaving the city devoid of Detroit 3 dealers. What was once a long auto row is now a handful of import stores. Local costs are high. Parking lot attendants earn nearly $20 an hour. Dealership technicians and salesmen are sometimes represented by the UAW and the Teamsters.
Enter Roger Penske.
Nissan had been longing for a dealership in San Francisco to take on Toyota. And Carolin's appeal to the deep-pocked Penske organization resonated with the Michigan retail company. Penske had operated large urban stores elsewhere, with mixed results. It acquired a Cadillac store in Manhattan in 1987, only to close it in 1991. It currently operates an urban showcase Audi store on the outskirts of London.
It was George Brochick, Penske's long-serving executive vice president responsible for 56 Penske businesses in the western region, who found himself standing on Van Ness Avenue listening to the Nissan rep lay out Nissan's ideas about how to do it.
The proposals did not include the Brooks building.
"Nissan had four possible locations to show us," Brochick says. "And real estate is extremely difficult in San Francisco. One plan required sales in this location and service in that location. Another required a car lot several blocks away. I happened to know that the Ford dealership that closed relied on a service operation seven miles from the sales office. Seven miles of driving in San Francisco is a lot of driving."
Brochick and the Nissan rep happened to be standing in front of the Brooks building as they conversed.
"What's wrong with this building?" Brochick asked the rep, pointing at the building that still had the Ellis Brooks Chevrolet sign up.
The rep acknowledged that it would indeed be the ideal spot for a store. But Nissan had appealed to Marie Brooks about it for years, the rep explained, and she wasn't interested.
Brochick made Penske's position clear: "If we're going to be in downtown San Francisco, why not be in the best building in a historic automotive row with all your operations under a single roof?" he said. "Otherwise, it won't work.
"If we can't be here, all under one roof," he said, "this is not a project for us."
Brochick phoned Roger Penske back in Detroit to make sure they were of the same mind. The CEO flew out to San Francisco to see the various real estate proposals for himself. "It didn't take him 15 seconds to say, 'You're absolutely right,' the executive says.
"It was the Brooks building or nothing."
There was another delicate issue at stake, beyond persuading Mrs. Brooks to change her mind. Nissan North America had been vigorously working to maintain separate Nissan and Infiniti brand identities. The brands have completely different architectural branding rules. They require different signs, different floor tiles and different customer lounge furniture. And now one of the biggest retailers in America was proposing to put them into a single location.
But it was all moot without Marie Brooks' buy-in.
Brochick met with her personally to assure her that Penske wanted to restore the building to vitality -- not merely use it. She liked what she heard. She knew of Penske's reputation for well-built and well-run dealerships. But to finally win her approval, Brochick says, "I had to bring in a deal-closer named Roger Penske."
Penske traveled to Brooks' home in San Francisco to discuss the plan with her.
"Mr. Penske does things the right way," Brooks says. "He wanted a first-class dealership, and that was very important to me. He's one of the few people you can do business with on a handshake today."
The renovation resulted in a new external face for the 216,000-square-foot building. Penske also replaced all the windows and restyled the mezzanine into a customer lounge with couches, Wi-Fi and coffee bar. Escalators now lead up from the showroom.
Penske -- a billionaire, according to Forbes magazine -- personally drove from floor to floor on the vehicle ramps to make sure there were no tight squeezes to slow down business or inconvenience customers.
Nissan executive Carolin, who walked through the building with him on a number of occasions, says the industry magnate wowed him with his attention to detail, explaining plans for new tile work and discussing interior building materials. Penske also paid to resurface the public sidewalk outside rather than leaving it up to the city.
"What I envy most," Brooks says, having toured the final project and participated in its May ribbon-cutting, "was what he did with our shop area. It's everything I would want for my employees. The break rooms, the toolboxes and tools, the changing areas and showers are very nice. And that's important; it's so difficult to attract technicians to come work downtown. Attracting people and keeping them is a real job."
Nissan signed off on Penske's solution to separating Nissan and Infiniti in the shared building.
There are now separate entrances, one marked with Nissan signs and the other with Infiniti signs. There are separate reception desks. The Nissan sales offices are on one side of the building, and Infiniti sales offices are on the other. There are separate delivery bays, separate service drives and service advisers. On the mezzanine, Infiniti customers lounge in one area and Nissan customers in another, even though it is all connected.
Brochick and Nissan personnel worked daily at the project site to see that it didn't run afoul of factory facility specs.
"We made sure they didn't end up with Nissan and Infiniti dealers around the country pointing at us and saying, 'Hey, what about that one?'" Brochick says.
Most important for Penske, the final result is a building that contains all dealership operations.
New-vehicle inventories are under the same roof as used vehicles. Service and body-shop areas are upstairs. In anticipation of the San Francisco EV market to come, the store has installed nine chargers. It is contemplating a 10th on the street outside the front door.
The store will be a showcase for Nissan and Infiniti's EV plans, Brochick says. But larger than that, it will be a strategic new location for those brands.
Outside estimates have put the project costs at $12 million to $17 million. Brochick declines to say what the company ultimately paid to get up and running in the Brooks building. But he says that, on a square-foot basis, renovating and leasing the building from Marie Brooks worked out to be less than what Penske typically spends on a new store.
"If we didn't expect a good return on all this, we wouldn't have done it," Brochick says. "It will be a good store for us. And when we're successful, it will make Mrs. Brooks happy." Autonews.com