Going Green: How to Run a Sustainable Dealership

June 14, 2019

Businesses in many industries are adopting more environmentally friendly practices. This includes proactive auto dealerships that use more efficient renewable energy sources and reduce overall energy and water consumption.

Environmental stewardship offers numerous benefits. These include both hard-dollar savings and an improved image among customers who prefer buying from sustainable businesses. Your dealership also could realize tax benefits by implementing approved solar and geothermal energy systems.

Green dealer programs

Some auto manufacturers have introduced programs to encourage and reward dealerships that practice environmental sustainability. For example, Honda launched the Honda Environmental Leadership Program in 2011 to recognize dealerships that initiate sustainability improvement programs.

More than 150 Honda dealerships have received the Honda Environmental Leadership Award so far. Three Honda dealerships have even become “electric grid neutral” by producing as much or more energy from renewable energy sources as they consume from their local electric utilities. Since 2012, Honda Green Dealers have collectively reduced output of carbon dioxide by about 34,000 metric tons and saved $75 million in energy costs.

The Honda program focuses on reducing energy consumption and maximizing cost savings. It targets a 10% or greater reduction in dealership total energy use via energy reduction programs with payback periods of up to five years. The program recommends various low- or no-cost measures, including:

• Applying automatic controls to interior and exterior lighting systems,

• Setting efficient thermostat set points and setbacks,

• Landscaping planted areas with native or adaptive vegetation,

• Instituting programs to minimize materials entering the waste stream, and

• Using alternative water sources, such as municipally supplied reclaimed water, captured rainwater and recycled car wash water.

Dealers also can complete an energy audit. Often utility companies offer these audits free of charge.

In 2015, General Motors launched a program similar to Honda’s initiative. To earn GM’s Green Dealer certification, dealers must demonstrate a commitment to environmentally friendly business practices by implementing energy reduction, renewable energy, water conservation and other sustainability initiatives.

One recent recipient of the Green Dealer certification is in Youngstown, Ohio. The dealership is using energy-efficient exterior and interior lighting and motion detection lighting extensively, and they also have installed low-flow water fixtures and faucets to reduce water usage. In addition, they sponsor environmental activities to help educate the community and have a dedicated “green team” that is working on new ideas for eco-friendly improvements.

GM’s goal is to use 100% renewable energy to generate electrical power at each one of its 350 operations around the world by the middle of this century. Sustainability initiatives have enabled GM to reduce carbon dioxide output by 388,000 metric tons and save $73 million in energy costs. More than 80 GM dealerships have received the Green Dealer certification since the program’s inception.

Model dealerships

If you want to “go green” but you’re unsure how to start, ask your manufacturer’s representative or members of your Dealer 20 group. The possibilities are endless. For example, a dealership in Colorado generates 40 kilowatts of solar power monthly via a rooftop solar array and canopy that’s located over an electrical vehicle charging station. And one in Ohio has installed a white roof to reflect sunlight and reduce heat load. It’s also installed low emissivity (Low-E) windows to reduce heat gain in the showroom.

Dealerships that have implemented sustainability programs like these cite many benefits of going green. For starters, these initiatives can increase operational efficiency and lower energy costs, resulting in higher profits. Dealerships may also gain a reputation in the community that they’re environmentally responsible. This can provide a competitive edge against other dealerships that aren’t practicing sustainability.

Higher employee morale is another potential benefit. Many people today want to work for employers that are actively practicing environmental sustainability. In addition, there are federal tax breaks for certain types of energy efficiency upgrades.

Start now

Environmental awareness will likely grow even more in the future. So, it’s time to think about ways your dealership can be more eco-friendly. Brainstorm with your management team about the kinds of green initiatives you can implement today.

Saving green by going green

The Business Energy Investment Tax Credit provides a financial incentive for dealerships to install commercial solar and geothermal energy systems. It provides a federal tax credit of up to 30% of the costs of qualifying systems that are installed before the end of 2019. The credit is for the total cost of the energy property and installation. However, it doesn’t include the cost of land or any property that isn’t integral to the energy property.

After this year, the credit for solar water heating, solar space heating and cooling, and solar process heat is scheduled to be reduced as follows:

• 26% in 2020,

• 22% in 2021, and

• 10% in 2022 and subsequent years.

The credit for hybrid solar lighting, fuel cells and small wind turbines is reduced to 26% in 2020 and 22% in 2021 and 2022. It will be fully phased out in 2023, unless it’s extended by Congress.

© 2019