White River Junction
Thanks to its location next to the cloverleaf of Interstates 89 and 91, and its available land and proximity to New Hampshire motorists, Sykes Mountain Avenue in White River Junction has become the epicenter of the Upper Valley’s auto sales.
Three new car dealerships are in various stages of arrival — opened, under construction and planned, adding to the three already in place.
Last month, Gengras Motor Cars, the owner of Upper Valley Honda in Lebanon, filed plans in anticipation of pitching the Hartford zoning board on a new, $5.3 million, 31,000-square-foot dealership. It would be located on 4.7 acres on an empty lot behind McDonald’s and Comfort Inn, with parking for 387 vehicles.
Less than a half-mile east, the steel frame of a new $4.8 million Chevrolet dealership from Key Auto Group is going up on an 8-acre lot with room for 459 parking spaces.
And last Saturday, Prime Subaru’s new $4 million, 38,500-square-foot dealership officially opened after nearly four years of development. The new Subaru location, occupying an 8.3-acre lot and with room for 427 vehicles, can accommodate four times the vehicle inventory the dealership could handle at its previous location on Route 5 in Norwich.
The new dealerships join other development activity along Sykes Mountain Avenue, which includes a 30-unit affordable housing complex being built by Twin Pines Housing. Another 88-unit affordable housing project on the corner of Sykes Mountain Avenue and Hickory Ridge Road has been permitted.
“We saw what’s going on with Prime and Key Auto and residential development in the area and decided this would be a good place to move,” said Jonathan Gengras, chief financial officer of Gengras Motor Cars.
He said that Upper Valley Honda, formerly known as Gerrish Honda, has run out of room at its current location on the Miracle Mile in Lebanon.
“We have close to 70 units stored off-site now behind the fire station in West Lebanon,” Gengras said.
Once complete, the six dealerships located within a half-mile stretch of Sykes Mountain Avenue — White River Toyota, Gateway Ford and White River Hyundai are already there — will tilt the weight of the automotive sales and service business from Lebanon to Hartford.
With the planned defection of Upper Valley Honda to White River Junction, as well as the closing of Miller Auto Group’s Chevrolet franchise on Route 120 in 2015, Lebanon and Hanover are left with only four car dealerships — Lebanon Ford, owned by St. J Auto of St. Johnsbury, Team Nissan North owned by Manchester car dealer Victoria Marcinkevich, and Miller Auto Group’s Chrysler, Jeep, Dodge and Ram and Volvo/Volkswagen franchises owned by Johanna Cicotte.
Automobile dealers clustering in a single district is hardly a novel concept. In fact, it dates to the early days of the automobile industry more than a century ago when “Motor Rows” sprung up in cities around the country. Chicago Motor Row, which had 50 architecturally significant buildings and today is a designated historic district by the city, featured 116 different makers of automobiles, including long-extinct names such as Hudson, Marmon, Thomas, Premier, Stevens-Duryea, Locomobile, Auburn and Cord, according to the Chicago Architecture Center.
The phenomenon spawned an academic discipline — the Federal Reserve Bank of Richmond (Va.) once published a study of auto dealership clustering — sometimes called “locational dynamics,” and has been adopted by numerous retail businesses, from fast food franchises to supermarkets to department and apparel stores.
As for the concentration of auto dealerships on along Sykes Mountain Avenue, dealers attributed it to large tracts of land at better prices than on the New Hampshire side of the Connecticut River combined with several key parcels hitting the market at the same time.
They also are taking advantage of what has been a good economy in retail light vehicle sales in Vermont, which were up 4.7 percent, to 42,547 vehicles, in 2017, although through August were down 1.6 percent from the same period last year. Sales also increased in all but one of the previous four years.
“The new dealerships is not a function so much of dealers banding together but happened because a bunch of land that is zoned industrial and commercial all became available at a time when the car industry was in a growth spurt,” said Rick MacLeay, former owner of The Car Store Subaru franchise in Norwich, which was sold to Massachusetts-based Prime Motor Group in 2016. MacLeay turned around that sale to acquire White River Hyundai from Gateway Motors in 2017.
“And it was significantly less than what land would cost in New Hampshire,” he added.
Portsmouth, N.H.-based Key Auto was able to snag a 65-acre parcel for about $1.6 million that previously was owned by Valley Land Corp., a real estate holding and land-leasing company based in White River Junction that was formed by the late Frank Gilman and which has been winding down gradually and selling assets in recent years to fund a college scholarship program.
The parcel on which the new Prime Subaru dealership has been built also once belonged to Valley Land Corp., as did land that today is owned by Heritage Automotive Group, the owner of White River Toyota.
Gengras Motors is in the process of acquiring two parcels that it will combine into one for its new Honda dealership from Hartford Land Co., which is not affiliated with Valley Land Corp.
The new Honda dealership site at the west end of Sykes Mountain Avenue is currently a vacant lot. It is near where White River Toyota — then known as Tri-Town Toyota and later as Tri-Nordic Toyota — was located before it moved east in 1992. White River Toyota in 2008 undertook a $3 million expansion, doubling in size to 30,000 square feet, and then in 2014 purchased 22 acres behind the dealership from Valley Land Corp. for $885,000 which it had slated for future growth.
Initially, White River Toyota had received approval to build a nearly 19,000-square-foot expansion at its dealership, but the building permit has lapsed, said Hartford zoning administrator Jo-Ann Ells.
Jason Quenneville, general manager at White River Toyota, said the impetus for the expansion was because “we’ve outgrown our customer base” but the dealership is now “undecided what we want to do.” Quenneville declined to elaborate.
Sykes Mountain Avenue, with its fast food franchises, gas stations, budget hotel, used car sales lot, U.S. Post Office distribution hub, back office operations center for Mascoma Savings Bank and car wash, may not be the most picturesque destination in the Upper Valley, but then car shoppers don’t come for the scenery.
Recognizing that manufacturing is no longer the driving force in the U.S. economy, Hartford rezoned Sykes Mountain Avenue in 2008 to allow for greater density of commercial businesses. Lori Hirshfield, Hartford’s planning director, said the town did not purposely target auto dealerships for the space, but once Prime Subaru went in it has acted as a magnet for others.
“We saw a variety of commercial uses as options” for the corridor, she said, pointing out that recent entrants also include the Riverbank Church, the Wicked Awesome BBQ restaurant and affordable housing complexes. “This is just the option where development tended to rise to the top.”
A major reason auto dealerships find Sykes Mountain Avenue so enticing is that 12,800 vehicles per day travel along that stretch of Route 5, according to the most recent Vermont Agency of Transportation data.
“You want to be convenient to the highway and you want to be where other dealers are,” said David Rosenberg, president of Prime Auto.
Contrary to the belief that placing your business among rivals risks losing sales, Rosenberg said, long-standing industry practice has demonstrated that clustering dealerships in the aggregate draws more car buyers and boosts sales over stand-alone dealerships.
“We’re looking to do more than 200 vehicles per month, more than double the volume we were doing at the old location in Norwich,” he said.
Moreover, although retailers along the Vermont side of the river have long bemoaned a disadvantage to retailers in sales-tax-free New Hampshire, there is a carve-out for motor vehicles because car buyers pay sales tax in the state where the vehicle is registered. So residents of Hanover, Lebanon and other Granite State communities are not penalized if they buy a car from one of the dealerships along Sykes Mountain Avenue.
Gengras said he hopes to break ground on the new Honda dealership location in April and be open “by the end of 2019 or early 2020.” He is looking to sell between 110 to 120 new and used vehicles per month.
Gengras said he’s not worried about the concentration of auto dealerships cannibalizing each other for business.
“Car dealerships like to be easy for customers to get to,” he said, because car buyers frequently like to spend a day test-driving different vehicles among neighboring lots. A dealership may lose a sale to the rival across the road, Gengras said, “but we’ll gain one, too. It goes both ways.”
John Lippman can be reached at jlippman@vnews.com.
Correction
Jason Quenneville is the general manager at White River Toyota. An earlier version of this story misstated his title.
