Business & Economy

Cities face challenge of empty car dealership lots

A lock keeps a gate closed at a vacant car dealership on Hawthorne Boulevard in Torrance.
A lock keeps a gate closed at a vacant car dealership on Hawthorne Boulevard in Torrance.
Susan Valot/KPCC

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When the recession hit, people stopped buying cars. Dealerships all over Southern California closed. You can still see those ugly scars in the retail landscape in San Bernardino, Torrance and any city that used to have a cluster of busy car dealers, and it's a challenge to fill up those vacant dealer lots.

It’s hard to miss the giant blue gorilla next to the 215 Freeway in San Bernardino. However, it’s easy to miss what’s behind the inflatable beast: San Bernardino’s half-empty auto mall.

The city lost half of its dozen car dealerships during the recession. It's what Emil Marzullo of the San Bernardino’s Economic Development Agency calls the “mother of all economic storms.”

"We didn’t lose the car dealerships because cars went out of fashion. We lost the car dealerships because money went out of fashion," Marzullo says.

Some dealers disappeared, such as the GM nameplates Pontiac and Saturn. Others consolidated within the city.

San Bernardino lost tens of millions of dollars in dealership tax revenue.

"When you’re in the Inland Empire, we were the epicenter of death," says Cliff Cummings, owner of Toyota of San Bernardino. "Unemployment was 15, 16 percent at its peak. Underemployment, another 20-something. People were moving out. You had population dropping. And credit-worthiness is tough in this neighborhood, so with tight money and bad credit, people leaving, no jobs, everybody was hanging literally on the edge."

Toyota of San Bernardino ended up on an island, surrounded by empty car lots. Business slowed.

So Cliff Cummings and his surviving neighbor, a Nissan dealership, got the city to back a nearly $1 million loan to install a flashy new sign along the freeway.

"And people were coming in and saying, 'Oh, you guys have reopened?'" Cummings recalls. "So if it gives you any idea, people were driving by an empty auto plaza. We were in the back of it. We had one building that was occupied on the freeway. Everything else was hidden. Everybody else was out of business. Two of them were severely vandalized. One was completely fenced in and boarded up. So people naturally would go by and just say, 'Oh man, those poor guys. They’re all out of business.'"

Marzullo says the city created a “Community Beautification Services” squad to clean up the area.

"And we used them to go in and we hit the spot blight issues, recognizing that we had control over the public right of way. We could do that," Marzullo says. "But the private properties were not maintained. The lights were out, number one. The trash was accumulating. Vandalism. Vagrancy. All those were issues. So we just did extensive work to try and keep those buildings appearing to be – they were still appearing to be vacant, but they appeared to be better than if we had done nothing."

The city also formed a business improvement district to free up loans to help the dealers with upkeep and security.

On a recent weekday, a couple of potential customers check out cars on the lot at Toyota of San Bernardino. Cummings says business is coming back.

"And I’m seeing a specific market, the Inland Empire, where so many businesses have gone out, you’ve created a void. And we want to fill the void," Cummings says.

Cummings bought some of the empty lots, brought in a Mitsubishi dealership and has another franchise in the works.

But Marzullo says it’s still a challenge to redevelop vacant dealerships.

"Some of them are tied up, still in litigation, foreclosure, bankruptcies, so we don’t have the authority to get in and motivate any kind of a change," Marzullo says. "But we will, to the extent we can, utilize redevelopment powers, authority and revenues to try and help dealerships move into those, get those cleaned up and eliminate any of the blight that might have been caused from the recession."

About 70 miles down the 91 Freeway, Torrance is dealing with similar issues — though not as severe — along Hawthorne Boulevard north of Del Amo Mall.

The city lost three dealerships in three years, leaving several empty lots along this stretch.

"When you drive down and you see 'for lease,' 'for sale,' 'available' — you see these signs up everywhere, it’s kind of depressing and you think, 'Wow, what’s going on?'" says Fran Fulton, the economic development manager in Torrance. "And you’re thinking that it’s gonna have a ripple effect. 'Well if this business is out, this one’s gonna go out, too.'"

But Fulton and Assistant City Manager Brian Sunshine say there are behind-the-scenes negotiations going on to match vacant lots to the right tenants.

"We just opened a new Hyundai dealership on Hawthorne Boulevard and we’ve seen some interest from some other franchisees from dealerships on repopulating Hawthorne Boulevard," Sunshine says. "It looks bad now, but we see some rebirth on Hawthorne Boulevard that’s going to enhance our retail corridor."

Fulton says neighbors near the empty car lots have fought to keep out businesses that might move back in. Fulton says they’ve gotten used to the peace and quiet.

Quiet streets are nice, but maybe not so nice when the quiet street is the busy boulevard that once paid the taxes in Torrance.