The recently opened Superior Toyota of Oakland hoped to be a rare example of an auto dealership that could swim against the harsh economic tide.
On Tuesday, employees were informed the 200,000-square-foot dealership at 8181 Oakport St. at Hegenberger Road would be shut down at the close of business Tuesday. It came as a surprise as the grand opening of the site was to be scheduled soon, and cars were being placed in the window fronting Interstate 880 this week.
Even a huge sign near Oracle Arena declared the site "now open."
While it's a Toyota dealership, owner Michael Kahn said Nissan actually provided the financing for the new building.
"In turn, with things getting very poor with the economy, they pulled out of the deal," he said. "I was left holding the bag with no financing.
"So we made the decision (to close) yesterday," he said. "I can't buy any more cars. Can't sell anything. The cars are still on the lot, but Nissan owns them now."
The dealership, which also sells Scion, is part of the Superior Auto Group, which closed all its locations. Superior Nissan of Fremont also shut down effective Tuesday. The others are in Southern California.
"We just set up," said Kahn, who has been in the car business for 30 years and owns other dealerships around the state. "We got in here in December when we moved over from Alameda, before the building was done. We officially opened up this week. We just finished all the construction, the lights went on, the signs went up. Our (sales) numbers immediately went up. And now this."
The closure includes not only the sales department but also the large service department at the site, Kahn said. About 100 employees will be affected, he said.
"I'm kind of in a state of shock because we thought we had such a bright and opportunistic future here, and with this, it just leaves an empty taste," said Akie Alifragis, customer relations manager of Superior Toyota of Oakland. "When we were told (Tuesday morning), some of our employees broke down."
During a tour last week, Alifragis was confident the more than 40 service bays, having all services and facilities under one roof, and as many as 1,200 cars on the lot at a time would lead the dealership to success. But in the end, it wasn't enough to shake the economy, he said.
Vehicle miles traveled last year fell by 107.9 billion, or 3.6 percent, the Federal Highway Administration said in a report last week. More than 880 dealers have closed across the country, with most coming in the fourth quarter, according to the Detroit-based consultant Urban Science.
"I think the economy has taken such a turn that there's some things you can't do anything about regardless of how hard you try," Alifragis said. "It's just a really tough time right now."
Oakland City Councilmember Larry Reid (Elmhurst-East Oakland), a supporter of the dealership project moving to his district, was greatly dismayed at the loss to the city.
"We'll have this big, empty building there," he said. "Mike's dealership was the largest Toyota dealership in Northern California. He spent $36 million building this new facility. The sales have been going up, so this is a big loss."
For customers who have bought new cars at the dealership, their cars are under warranty, and any other Toyota dealership can take care of maintenance issues.
The completion of the dealership was part of Oakland's redevelopment plan and was to create momentum for the "Coliseum Auto Mile," which includes Coliseum Lexus of Oakland and Infiniti of Oakland.
It was also to create "a significant source of sales tax revenue for the city," according to a publication released by the Community and Economic Development Agency of Oakland.
The deal itself was completely privately funded.
The building will remain intact for the time being, but if it is converted to office use, it would add 200,000 square feet to the Oakland Airport market that has a vacancy rate at about 21 percent, according to a recent fourth quarter by CB Richard Ellis.
Staff writer Angela Hill and Bloomberg News Service contributed to this story. Reach David Morrill at 925-977-8534 or email@example.com.