After nearly ten years of negotiations with the City of Arcadia, Rusnak Mercedes’ recent completion of a deal to expand the auto seller to Santa Anita Avenue will all but lock the dealership to its Arcadia location for the foreseeable future, according to those involved with the agreement.
That’s a very good thing for everyone in Arcadia, even those who may never set foot in the showroom currently on Huntington Drive. With the average luxury car there selling for about $57,000, Rusnak/Arcadia has long been the City’s single biggest sales tax generator, contributing $700,000 – $1 million per year to the City, according to estimates of sources with knowledge of the data. That is the equivalent of the cost of multiple police officers, firefighters and their vehicles and equipment, as well as public library staff and technology.
Talk about a good reason to Shop Arcadia; it’s rather astounding to learn that some car shoppers will drive miles to another city to buy a $57,000 Mercedes for a mere hundred dollars less than the price at Rusnak/Arcadia when that results in less funding for City services in Arcadia. That also indicates the kind of competitively slim profit margins on some brands of new cars from manufacturers that try to build a business model based on market-share and high-volume sales. And that’s why, generally, in today’s auto industry, dealers tend to generate far more profit from sales of used cars and servicing, kind of like movie theaters that make most of their profit on sales of popcorn and soda.
If Arcadia seems destined to have only one auto dealer in town, Mercedes has proven to be a good one — the brand and the Rusnak/Arcadia dealership wound up being relatively recession-proof, or at least weathered the storm far better than many others, including the multiple dealers three miles to the south on Santa Anita Avenue in El Monte near the I-10, all of which dried up, blew away, and created acres of a ghost town over the last few years which left the City of El Monte struggling far more than Arcadia to endure the economic slump.
Mercedes is amongst the most popular brands of vehicles among Chinese, which explains why Rusnak was willing to stick it out so long under less than ideal circumstances in Arcadia, where Chinese are now the majority ethnic group.
With demolition last month of the buildings long ago purchased by the former City-managed Redevelopment Agency, which relocated the businesses in those buildings, Rusnak Mercedes is expected to begin construction on the new facility by the end of this year and have it completed within about 18 months. The sooner the better for Rusnak since the years of delays in reaching an agreement to expand has already greatly challenged the Arcadia Mercedes dealer’s ability to be compete on a level playing field with other dealers that have expanded.
Nonetheless, sales and all performance standards within its control have continued to rank the dealership among the top of the 360-plus Mercedes dealers in the country.
While all building design plans must still be completed, approved by Mercedes, and permits approved by City officials, the broad outline calls for the construction of a new showroom on Santa Anita Avenue that will be triple the size of the current one on Huntington Drive, the latter of which would be used for purposes other than a showroom. There would also be a modern workshop and multi-level parking for new cars, employees and customers. Estimates for the expansion but figures from insiders have ranged from $10 million to as much $25 million when everything is factored in.
The expansion should help sales of Mercedes at Rusnak/Arcadia grow by as much as 10%-20%, but it will still be many years before Rusnak/Arcadia recoups the cost of expansion, let alone the millions of dollars in potential revenue left on the table while negotiating with the City.
But for residents of Arcadia, it doesn’t matter how much profit Rusnak/Arcadia makes on each sale, or how long it takes the dealer to break even. The tax flowing to the City’s coffers is based solely on the price of each car sold — and remember, that currently stands at an average of $57,000 per vehicle.