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Car dealers put on ritz

Drive a Lexus? AutoNation want to pamper you.

Walk into a new AutoNation dealership in West Palm Beach and you'll find more than just a pot of coffee on a hot plate, rigid chairs or some stale doughnuts.

Customers at the new $40-million Lexus of Palm Beach can browse for cars or wait for an oil change by noshing at an Italian-themed restaurant, surfing the Web at a computer station, taking a load off in a massage chair and ogling a 500-gallon aquarium.

After Tuesday's ribbon-cutting, Lexus of Palm Beach became the biggest in the family of dealerships owned by AutoNation Inc., the nation's largest auto retailer, which operates in the Tampa Bay area as AutoWay.

The Fort Lauderdale-based company is betting that customers looking for an upscale car like a Lexus will be drawn to luxuries usually found in expensive hotels or restaurants.

It's also a clear attempt to lure customers amid a sales environment made difficult by the troubled housing market and the national credit crunch.

The 180,000-square-foot dealership holds 700 vehicles, including 25 in the showroom, and 67 service bays. It offers free valet parking, private meeting space with full catering and detailed marble and woodwork throughout.

While the dealership is unique for South Florida, it's not alone nationally in offering perks.

Herb Chambers Lexus in the Boston area has wireless Internet and a children's playroom, while Fletcher Jones Mercedes-Benz in Newport Beach, Calif., provides an airport shuttle and free carwash, even if you are not getting your vehicle serviced.

Edward Yruma, a JP Morgan analyst, said many auto manufacturers have been seeking facility upgrades. He said AutoNation has not incurred much risk with such an expensive dealership, partly because the luxury car segment has not been as significantly affected as others, and also because the West Palm Beach area is wealthier than most.

"The premier brands are looking for premier facilities," Yruma said. "All of the auto retailers have showpiece stores where they have sunk a lot of capital into them."

Chris Denove, a vice president for J.D. Power and Associates, called the move a gamble because it's not guaranteed AutoNation will get enough business to justify the added expense of the amenities, possibly forcing it to pass some costs to customers.

He noted that some people will drive longer distances to check out the dealership, while others may not care about the added amenities, preferring to get their loaner and leave rather than sit in a massage chair while their car is being fixed.

"It's easy to sit back and think that Lexus buyers will pay," Denove said. "We find every day in our research that luxury buyers are the most aggressive, price-sensitive buyers on the market."

Also, while the amenities add to the experience, any car buyer can attest that the experience can be ruined if they don't like their salesperson, regardless of the brand or retailer.

"Based on our research, although the facility can impact customer satisfaction, the interpersonal dealings between the customer and the staff trump everything," Denove said.

Still, Denove said AutoNation has a good chance to make the dealership work out.

"AutoNation has a good track record and Lexus is a great brand to do it with because it has very loyal customers," Denove said. "If I were a betting man I would gamble that it would pay off at the end, but it's a close call."

By the numbers Luxury dealership

$40M Cost of Lexus of Palm Beach

500 Size of aquarium, in gallons

180,000 Size of dealership, in square feet.

700 Number of vehicles, including 25 in the showroom, and 67 service bays.

[Last modified December 13, 2007, 01:46:57]