The Drive Toward Energy Efficiency
Car dealerships implement sustainability and reduce costs
Automobile dealers are discovering that by living and working sustainably they can reduce [energy] costs, increase their brand/dealership's recognition, attract more customers and retain employees. Renovations such as LED lighting retrofits or the installation of LED luminaires during new construction are an excellent way for car dealerships to begin achieving their sustainability objectives.
A number of factors contribute to dealerships' sustainability efforts: for example, manufacturers' national initiatives, consumers increased concerns about environmental issues; and the challenging economy has forced dealers to reduce their operations and cut their head count.
While dealership parking lot lighting serves a dual purpose of attracting potential customers and as a 24/7 security system, they devour energy. Auto dealerships, with this extensive use of lighting, consume on average more energy per square foot than a typical office building: using about 110 kBTU per square foot compared to prime office space at 93 kBTU.1 This amount can add up to thousands of dollars in energy costs for the typical dealership each year.
Reducing energy costs is a major consideration for dealerships, which is their third-highest overhead expenditure.2 To that end, in 2006, the National Automobile Dealers Association (NADA) formally endorsed the Environmental Protection Agency's (EPA) Energy Star Challenge by asking their 20,000 members to reduce energy use by 10 percent or more annually. The EPA estimates that if auto dealers cut their energy use by 10 percent [annually], they would save nearly $193 million and prevent more than one million tons of greenhouse gas emissions.
In 2007, NADA and Energy Star launched a joint Energy Stewardship Initiative to help auto dealers improve the energy efficiency of their facilities and operations. The initiative provides data, tools and other strategies for dealers to implement improved energy practices and technologies at their facilities. Since this launched, more than 800 dealerships have improved the efficiency of their facilities by reducing energy use by 10 percent or more annually.3
Automakers have been climbing aboard the "green" bandwagon for years, with low-emission, high-mileage vehicles that appeal not only to customers looking to save fuel, but to buyers eager to participate in what's perceived to be an environmental solution. Now dealerships are extending that "green" bandwagon.
In 2010, Ford introduced a pilot program, Go Green Initiative, at three of its dealerships and is planning to make changes at all 3,500 dealerships nationwide in the future. The dealerships, one in Florida, one in New York and one in Nevada, implemented a comprehensive assessment and evaluation of the firms' impacts, primarily from an energy use standpoint, but looking at impacts across each site. Lighting was a key element of the retrofits, aimed at addressing both the quantity and the quality of the on-site lights.
In August 2006, a Toronto-based automotive group installed a 50-kilowatt wind turbine at its Honda dealership in Maple, Ont. It was the first commercial-scale use of a wind turbine at an auto dealership in Canada. The wind turbine provides about half of the energy requirements for the dealership, which is the equivalent of powering 17 homes.
In 2008, a state-of-the-art General Motors dealership in Michigan applied for LEED Gold certification, two months after a Texas Toyota dealership became the first in the U.S. to achieve the distinction.
Each dealership implemented energy-efficient lighting, which provides one of the quickest paybacks.
There are both state incentives and federal tax credits available to help offset lighting retrofits. For example, New Jersey has been offering $100-$200 for every fixture (400w-1000w) changed out or retrofitted; meaning, if a dealership changes 50 pole lights the dealership will qualify for $5,000-$10,000 in state incentives.
There are also federal tax credits available through the Energy Efficient Commercial Buildings Tax Deduction (CBTD) and Bonus Depreciation. The CBTD or Energy Policy Act (EPAct) allows a business that has installed or retrofitted the interior space with energy efficient lighting, while still meeting acceptable light levels, to earn an accelerated tax credit of up 60 cents per square foot. So, for a 100,000 square foot facility the credit would be $60,000.
For an exterior retrofit such as pole lighting, the dealer may use the bonus depreciation deduction, which allows the owner or leaseholder to deduct 100 percent of the equipment purchased in the year it was put in service rather than the typical 39 year straight depreciation.
The government will not be offering these state and federal incentives much longer. This bonus depreciation was put in place until December 31, 2011; after 2011, the deduction amount will only be 50 percent.
1 National Automobile Dealers Association, "A Dealer Guide to Energy Star®, Putting Energy into Profits," 2006.
2 E Source Customer Direct, "Managing Energy Costs in Auto Dealerships"
3 Auto Remarketing, "NADA Encourages Dealers to take Survey on Energy Use," July 5, 2011.
4 Wheeland, Mathew. Greenbiz.com, "For Expands Efficiency Efforts to its Dealers' Lots, February 14, 2010.