Car demand fizzled two years ago, but now Delray Beach has two big dealerships in the works
Despite car sales waning since the beginning of the pandemic, Delray Beach is seeing significant reinvestment in the industry with a pair of large new dealerships in development .
Earlier in June, the city gave preliminary approval for a new 4.3-acre Hyundai dealership at 2419 N. Federal Highway. As a result, Delray Hyundai would move from its current location just south of George Bush Boulevard into the new property, which is twice as large.
Additionally, a new AutoNation Land Rover Jaguar dealership is being planned for 1001 W. Linton Blvd., adjacent to a Mercedes-Benz dealership. Plans have been submitted to the city and are currently under review.
This comes less than a year after Tesla opened a service center in Delray Beach along Federal Highway.
The commitment to new dealerships comes after the industry experienced significant losses at the beginning of the pandemic. In 2020, rental car companies sold off more than 770,000 vehicles, a third of their combined fleet, according to the Washington Post.
Additionally, inflation and supply chain issues have caused car prices to skyrocket with new car prices jumping 12.6% since last year, according to Fortune Magazine. In May, new car sales dropped 11% from April, marking the lowest level since December, according to Bloomberg.
Karl Brauer, an executive analyst at iSeeCars.com , said supply-chain issues, such as a global shortage in microchips, which are vitally important for new cars, have helped cause the significant drop.
“We don’t have enough cars being produced and that’s causing people to keep their current car, which restricts used-car supply,” Brauer said. “[That] causes old and new [car] prices to shoot up like they have in the past 18 months.”
While the supply-chain issues are causing significant problems, Brauer said he thinks there’s “optimism and some valid thinking [in the industry] that this is transitory” and that eventually the microchip issues will be resolved and help stabilize the business model.
AutoNation “continues to both build and buy dealerships, so clearly there’s confidence at that level for these kind of dealer conglomerates to continue to grow whether the buy existing dealers and add them to the mix or build brand new ones,” Brauer said.
Delray Beach currently has 22 car dealerships, Planning and Zoning Board member Christina Morrison said during a public meeting.
The proposed Hyundai dealership would be built on a vacant lot that’s remained undeveloped for more than a decade and an adjacent pottery store. The land was purchased for $10 million in January, according to Palm Beach County Property Appraiser records. Nearby businesses include Gunther Volkswagen and Gunther Volvo dealerships, a car wash, a home furnishing store, and bicycle shop.
The project would help revive the area and create new employment opportunities, said Bonnie Miskel, an attorney representing the developer, in documents submitted to the city.
Miskel added the dealership would “allow for a multimillion-dollar investment in construction and related costs and the creation of scores of new jobs” as well as an increase in property values.
Planning and Zoning Board member Allen Zeller was in favor of the new dealership, noting that “not a lot has happened” in the area over the past decade.
“That area is blighted,” Zeller said. ”The buildings are old buildings most of them. The only newer development is associated with car dealership and automotive businesses on Federal Highway.”
Board member Joy Howell, who voted against the project, questioned whether another car dealership was the best use of the city’s scarce available land while the city faces a housing shortage.
“I think we’re kind of making the decision as if it’s a choice between a blighted lot and car dealerships,” Howell said. “What if you had a developer who came in and said I want to put townhouses on this big, huge parcel? I mean, developers I know are looking for large in-fill lots if they can find them.
“We already have some townhouse developments on Federal right now and if you had more, that’s when you get restaurants and little retail and walkability. I could see that as a vision for that part of Federal, not going more in the direction of the big, humongous car dealerships.”
The project will go before the City Commission for final approval later this year.