They revived projects for the construction of car dealerships along the Ring Road

St. Petersburg car dealers are returning to projects for the construction of showrooms along the Ring Road, the commissioning of which was frozen due to the crisis. But they don’t want to start new projects there, preferring to go to the regions. The next stage of active development of car dealer networks in St. Petersburg will begin no earlier than next year, market participants say.

Before the crisis, St. Petersburg car dealers were actively acquiring land plots along the ring road, where they planned to build either hotel showrooms or entire dealer villages. According to Kommersant, by the end of 2008, about 100 hectares of land were purchased for dealerships in the Kudrovo and Parnas area alone, on which, according to various estimates, more than 60 showrooms could be built. But before the crisis, a major project in Kudrovo was implemented only by the Strategy Growth holding, which built General Motors, Honda and Volvo showrooms not far from MEGA-Dybenko, spending at least $40 million on this. The Group announced plans to build a Mercedes showroom there "Olympus".

At the other end of the Ring Road, in the Parnassus area, the Inter Auto Team company also began building a Toyota showroom before the crisis. Next door, the Renault auto center intended to build the Petrovsky Auto Center. And in Devyatkino the Atlant-M holding began to build a Mitsubishi showroom. With the onset of the crisis, when the Russian car market shrank by exactly half, all these projects were frozen along with the plans of companies that did not have time to start construction. At the same time, the Strategies Rost enterprises in Kudrovo found themselves on the verge of bankruptcy, accumulating a lot of claims from creditors. Only Olympus managed to sell part of its land in Kudrovo with a project to build a Mercedes showroom to the Russian division of the German brand, which will now build its center independently.

Now sales are growing again (in January-February they increased by 77% in the Russian Federation), so dealers are returning to previously frozen projects. Next week Inter Auto Team will open its Toyota showroom in Parnassus. Investments in its construction could reach $15-17 million, says Evgeny Pekarsky, general director of Atlant-M Lakhta. For comparison: in March 2009, the Inchcape company opened a new Toyota showroom in St. Petersburg, investing about $30 million in its construction. Petrovsky Auto Center also returned to the project to build a Renault showroom in Parnassus. The dealer's general director, Eduard Markman, says it will be launched before the end of next year. According to market participants, investments will amount to about $10 million.

The Atlant-M holding will also launch its auto center in Devyatkino in September-October this year, said the head of the company in the Russian Federation, Alexander Pyrko. The salon is almost built, about $16.5 million has already been invested in it, but to launch the enterprise, you need to choose a new brand (negotiations with Mitsubishi are ongoing, but other brands are being considered) and invest up to $6 million more, explained Mr. Pyrko.

At the same time, St. Petersburg dealers are no longer in a hurry to start new construction, especially along the Ring Road, despite the growth of the market, preferring other forms of development: redistribution of the existing portfolio of brands or entering the regions. In St. Petersburg, unlike the regions, there is strong competition, high construction costs and limited market growth potential, says Igor Sedov, director of development at Axel Group. This company also has 10 hectares in Parnassus. But they were purchased more “as a tribute to fashion,” admits Mr. Sedov. There is no need to talk about the construction of new salons in this territory now, including due to the undeveloped infrastructure along the Ring Road, he explains, clarifying that his company has now made a choice in favor of the regions. Recently, the general director of the Alarm-Motors company, Roman Slutsky, and a number of other companies also spoke about plans for development outside of St. Petersburg due to the saturation of the city’s market.

However, the construction of new salons will continue in St. Petersburg in the near future. In particular, new centers for Nissan, Hyundai, GM, Audi, Mercedes, Renault, Volkswagen, Infiniti, Porsche, Skoda and Kia will appear in the city. But importers mostly opened vacancies for the construction of these enterprises even before the crisis. Most importers will begin concluding new agreements with St. Petersburg dealers no earlier than 2012, says Alexander Pyrko. After this, dealers may again begin to actively develop their land along the Ring Road, he believes.

Mikhail Serov

Dealers are back to normal