In September, a group of metro San Francisco auto dealers banded together to form the San Francisco Auto Jobs Alliance (SFAJA) to focus on economic growth and job creation in the city by encouraging consumers to "buy local" at the city dealerships, rather than trekking out to the suburbs. The group's chairman, Andy Hansen (also the COO of Royal Automotive Group), spoke to Aftermarket Business World about the group's goals, and the role of service and parts in their success.

Like this article? Sign up for our enews blasts here.

Why was this group originally formed?

Several months ago, the city of San Francisco began looking at ways to change the city business tax, and they decided that instead of having a tax based on payroll numbers, they would base it on revenue. As you know, dealers are in a business where we have very high revenue because the product is so expensive, but our margins are very slim. We were looking at paying another $100,000 in additional taxes if the tax code they were proposing actually went through. We got together as a group and were able to talk to the supervisor and president of the board of supervisors, and they worked with us to lower the tax rate that dealers would have to pay. We decided that we should have a voice at city hall, and that we would be much more effective as a group, rather than acting individually.

What are your key priorities this year?

There are a lot of misconceptions about dealerships in the city: that there is no parking, no inventory, the prices are higher, etc. A lot of what we are focused on is combating those misconceptions with public. Right now, the statistics show that if 10 people in San Francisco went out to buy a car, only three would buy in the city.

Are service and parts operations affected at all by a dealer's location in the city?

I think that as far as service and parts, we're similar to suburban dealers. The cost of doing business may be a bit higher in San Francisco, but a lot of us own our buildings, so it doesn’t impact us too much. People are actually much more willing to service a car in San Francisco, because they're driving into the city for work.

You're also focusing on the jobs that dealerships create, correct?

Between the seven dealers in the group, we generate $700 million in revenue, and we employ more than 1,500 people. Roughly 80 percent of those are blue-collar jobs. People think of car dealerships as just having salespeople, but the fact of the matter is that most employees are in parts, or they're service technicians, or they're in another department. One of our goals is to hire as many people as we can in San Francisco.

What role does service play in the success of these dealerships, and in providing jobs in the industry?

Service and parts are the backbone of a dealership. We really depend on fixed operations to keep the dealership in business. We really depend on customers coming back for maintenance and repair work to maintain a viable operation.