City’s Love Affair with Auto Dealerships Pays High Dividends

Published : Tuesday, April 25, 2017 | 4:56 AM

When the City of Pasadena recorded a 9.3 percent growth in sales tax receipts in the fourth quarter of 2016 as compared to the same period in 2015, the Autos and Transportation business group became third among the major sources that contributed to the tax growth.

Finance Director Matthew Hawkesworth, in a report in the City Manager’s Newsletter, said strong new motor vehicle sales and auto leases accounted for the car industry making it to the list of top producers, and now it’s making some in the community pause to wonder: Is Pasadena is still on the way to becoming more of a bike-friendly city than a car-friendly city?

In the City’s Fourth Quarter Sales Tax Update, Autos and Transportation registered a 17 percent increase in sales tax contributions to the City between the 2015 fourth quarter and 2016’s fourth quarter. Some of the car dealers in Pasadena say business is good and in fact could be better than the state average, or even the national average.

“Much higher than the national or California average,” says Victoria Rusnak, President and CEO of the Rusnak Auto group. “Southern California is one of the car capitals of the world, and there is a tremendous level of interest in performance and luxury vehicles in particular. This is one of the reasons that many of our dealerships are in the top 10 nationally in sales.”

Rusnak credits the strong sales not only to a strong sales team in Pasadena, where Rusnak Maserati has been for about 50 years, but also to their being fortunate to sell strong brands.

“Our current lineup is stronger than ever,” Rusnak says.

The City’s Economic Development Manager Eric Duyshart attributes much of the strong sales not only to local buyers but also to Southern California customers who come to the City’s dealerships to buy their cars.

“Pasadena is a place where people throughout the region come to buy cars,” Duyshart says. “We have some very nice auto dealers in Pasadena and they provide for a broad part of Southern California.”

Car dealers like Honda Pasadena, Rusnak Maserati, Symes Cadillac, Tesla Motors, Thorson GMC Buick and Toyota were in a list of the top 25 sales tax producers, the quarterly tax report showed.

Paul Little, President and CEO of the Pasadena Chamber of Commerce, believes one thing that contributed to the strong new vehicle sales among local car dealers is that buyers now have a greater tendency to buy cars online, even when they still go and visit car dealers.

“I think the big thing that changed is internet sales, the online sales of cars,” Little said. “I think one of the things that happens is that people go to look for a car, they’ll go to dealers around them and find the car they like and then they go online to try to get the best price. So everybody will have to be very competitive. And we’re all now very used to being part of the online shopping network.”

Little also mentions that car dealerships developing a strong connection with the community is a big factor in gaining more customer attention.

“Auto dealers tend to support local charities; you see Rusnak involved in a whole lot of charity events, Thorson Buick GMC does fundraising events on their job sites and is very involved in a lot of local charities around town, as are the other car dealerships,” Little said. “They have a strong understanding of the importance of being a part of the community they’re in.”

In Glendale, one of Pasadena’s neighboring cities, information from their car sales figures also reflect a significant increase in sales taxes.

Jennifer McLain, Principal Economic Development Officer at Glendale’s Community Development Department, said new vehicle sales for the 2016’s fourth quarter went up 2.2 percent, while auto leases increased by almost 18 percent.

“The autos and transportation continues to show steady growth; year over, it was up 4 percent compared to the same time last year,” McLain said. “Overall, Glendale has a diverse and robust economy, and auto sales and leases continue to play an important role in the city’s budget.”

One of the car dealers in Pasadena said the City should not only look at car sales per se contributing big to the City’s revenues, but should also be aware that the auto industry is “a complete example of trickle-down economics.”

“Look at how many shops we have in Pasadena that do body repair, that do general repair, that do customization of vehicles,” Merlin Froyd, General Sales Manager of Thorson GMC Buick says. “You buy a car, that car is going to affect somebody’s life – when they take a girlfriend to a prom, when they go to a wedding, when they pick up their groceries, when they take their kids to school, when they pick up the kid after a big game – that one car also affects fuel that’s being bought which again, that’s fuel tax right there that goes to the state, that affects registration which goes to the state, that affects all the other businesses that cars affect.”

Which is why, Froyd says, that he does have a good working relationship with the city, but wishes the city was more car owner friendly providing more infrastructure for cars.

Froyd said the City should strive to make it more convenient for people who own cars.

Froyd remembers the City met one time with several car dealerships and talked about the new luxury apartments that are going up. He said one of the questions raised was whether there would be additional City parking.

“And their response was how the City was trying to become a more green city and trying to pursue more of those bike options and that is really where the urban environment is going,” he says. “I don’t know if that’s the best thinking. One reason is the City makes an incredible amount of tax revenue off its car sales.”

Froyd said he has seen new bike lanes coming across the City, but fears they are currently underused, and that he would prefer the City would make a stronger effort to make ownership of vehicles a better experience – including increasing parking spaces.

“I just wish the City will continue and even be more friendly towards vehicle owners,” Froyd said.

Duyshart, as the City’s economic planner, believes modern urban design, like Pasadena is practicing, calls for more options as far as transit is concerned.

“We want to make sure that we are growing in a way people can have an option to get around and move forward with their daily business without a car,” he said.

 

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