It is the first upgrade of the Andersons Bay Rd site in more than two decades.
Precast concrete panels for a workshop were being stood in place yesterday in the first phase of the redevelopment, which will be followed by construction of a new showroom, general manager Robert Bain said.
"It's the first major upgrade in more than 20 years at this site,'' Mr Bain said.
Dunedin construction company Naylor Love was into its fifth week of the 39-week programme, which was going to plan, he said.
The redevelopment, which attracted several tenders, would enlarge the showroom and workshop facilities of the 85-year-old company, which has operated on the site since 1958, while the forecourt would remain about the same size.