[5] Bmw Of Minnetonka In Daily Headline

If you build the uberdealership, will people come — and buy $70,000 cars?

That’s the question as what’s believed to be the Twin Cities’ largest car dealership, at 223,000 square feet and four floors of indoor showrooms, opened this week.

BMW Minnetonka’s new location is four times as large as its former home and complete with a business center, a home theater, indoor play areas for kids and freshly baked chocolate chip cookies daily.

“People say either you’re a visionary or an idiot,” said Peter Hasselquist, president of the Twin Cities Automotive group behind the BMW dealership. “We’ll find out.”

The investment in the expanded Wayzata Boulevard location is eye-popping to many. The place feels like a BMW shopping mall. No trudging over icy pavement to check out the 325 models on display indoors here.

Paul Walser, who operates another local dealership empire, said he admires the courage behind what he calls “a bold and gutsy move.”

“All eyes are on it,” said the operator of Walser Automotive Group. “It’s an extraordinary investment relative to what is typical for auto dealers.”

He guesses BMW Minnetonka cost around $35 million to build, though Twin Cities Automotive won’t reveal the figure. A more typical investment is the $2.5 million Walser spent last year to build a nearly 20,000-square-foot Subaru dealership in Burnsville.

The expanded BMW dealership opens in a period when auto sales are down and after 33 auto dealerships closed last year in the state, according to the Minnesota Automobile Dealers Association.

BMW holds only a small share of new car sales in Minnesota, though the cars are top sellers in higher-end categories, according to the association. Its models boast sticker prices ranging from $30,000 to more than $100,000. The BMW 3-Series — at the lower end of that range — is the top seller in the near-luxury category, outperforming the Audi A4 and Infiniti G. The 5-Series is tops in the luxury category, beating out the Lincoln MKS, Cadillac DTS and Mercedes E-Class.

Scott Lambert, vice president of the state’s dealers association, said that even when times aren’t tough, there’s always some risk when opening a location, though the brand’s following may help.

“BMW owners are very loyal customers and (BMW Minnetonka) is not that far away from their previous location, so they’re not moving away from their customers,” he said.

Case in point is 38-year-old Eric Kozar, who became such a fan of BMW’s performance and engineering after buying his used 1995 5-Series in 2000 that he formed the Minneapolis Bimmer Group. Kozar recently urged his car-shopping Minneapolis neighbors to check out the cars.

“They just got hooked on them, too,” Kozar said. “There’s just something about them.”

Hasselquist is counting on such a fan base. “This is becoming a volume business, and we think we’ll have the volume to make this work,” he said.

He notes the BMW franchise used to sell 10 to 12 new cars a month, and in recent years, that had jumped to more than 80 new models in good months.

Hasselquist and the Pohlad family are partners in Twin Cities Automotive, which they formed when they purchased the BMW franchise in 2008. It’s the first foray into the car business for the famed local family, known for its ownership of the Minnesota Twins. The Pohlads declined to comment for this story through a spokeswoman. Twin Cities Automotive also operates Coon Rapids Chrysler Jeep, St. Cloud Hyundai, Inver Grove Volkswagen and Inver Grove Hyundai.

Hasselquist had been a partner and helped develop the only other Twin Cities BMW franchise, Motorwerks BMW in Bloomington, which opened in 1989. That 180,000-square-foot dealership served as the model for the new franchise.

Twin Cities Automotive’s BMW franchise had been part of Sears Imported Autos in Minnetonka, where it co-existed with the Mercedes-Benz brand. Twin Cities Automotive committed to BMW corporate that it would build a larger facility to show off the brand exclusively.

In November 2008, as the economic meltdown was in full swing and dealer closings were accelerating, Twin Cities Automotive broke ground on the Interstate 394 location.

“We crossed our fingers and gritted our teeth and went forward,” Hasselquist said.

To make the economics work, Walser said, the Minnetonka dealership will have to sell a lot of cars. In the short run, that could be difficult.

“These days, people tend to be a little more understated in their houses and their cars and their clothing and the restaurants they choose,” Walser said. “I think the things that represent a high degree of wealth are not necessary popular. It’s almost cool to be a little understated.”

Hasselquist acknowledges the challenge, finding that many of his longtime customers still could afford new but opt for used instead as a tradeoff.

“Sometimes, if they’re a company owner and the company’s laying people off or there’s more downsizing, they think, ‘What kind of image is that, to buy a brand-new BMW rather than a used one?’ ” Hasselquist said.

As a result, sales last year of new BMWs were down 20 percent at the former location, but that was offset by a 25 percent increase in used model sales, he said. The Midwest isn’t a big sales region for the brand generally.

Still, Warren Fritz, who’s been selling the cars since 1997 in Minnetonka, is counting on brand appeal, not only among people who’ve made money and want to show it off but among converts who love to drive.

“The enthusiast will spend money on a car,” he said.

Gita Sitaramiah can be reached at 651-228-5472.