Just five months ago, Driver's Mart Worldwide, a group of used-car superstores, proudly announced it was adding St. Louis retailer Behlmann Automotive Holdings to its roster. But last week, Behlmann Automotive officials said they had reconsidered.
Behlmann Automotive is the second major dealership to withdraw from Driver's Mart.
Driver's Mart is based in Grand Rapids, Mich., and was formed in 1995 by a group of prominent dealers as a response to the retailing innovations of Saturn Corp., CarMax, CarChoice and AutoNation USA. Driver's Mart members want to develop a national chain of used-car superstores.
South Florida dealer Mike Maroone left Driver's Mart earlier this year to take a job as president of rival AutoNation USA's new-car operations. AutoNation is owned by Republic Industries Inc. of Fort Lauderdale, Fla.
In addition, Texas dealer Carl Sewell dropped out before Driver's Mart lifted off, saying there were already too many superstore competitors vying in his primary Dallas market.
Other defections to Republic remain a possibility, since Republic has targeted precisely the kind of dealerships with high customer satisfaction that form the nucleus of the Driver's Mart group. Other dealer groups, both public and private, also are looking to acquire dealerships.
OTHER DEFECTIONS POSSIBLE
But Tom Eggleston, president of Driver's Mart, said he believes the size of the Driver's Mart group should now remain stable at about 21 retailers.
If the company loses one or two more, they should be quickly replaced 'with highly qualified and motivated retailers,' he said.
Driver's Mart is in discussions with a 'large dealer group in St. Louis' to handle Missouri.
Driver's Mart now has only one store open, in Neenah, Wis. A second store is scheduled to open July 1 in Birmingham, Ala., and stores in Flint, Mich., and Salt Lake City will open soon afterward. The chain hopes to have 15 to 20 open by the end of the year, Eggleston said.
Behlmann Automotive had been scheduled to convert its five Car-nections used-car stores into Driver's Marts. Those stores will now remain Car-nections.
Behlmann Automotive is a large conversion van, Pontiac and GMC dealership. It sold about 13,000 new and used vehicles last year, and posted revenues of more than $300 million.
Herb Lanese, president of Behlmann Automotive, said his organization pulled out because it had too many projects to handle the additional duties and capital needed to get its Driver's Mart stores up and running.
Lanese joined Behlmann Automotive at the beginning of May. He was formerly president of the aerospace division of McDonnell Douglas Corp. in St. Louis.
'Dealerships tend to be undisciplined organizations,' he said. 'We had not clearly decided what our strategy was. If you can't decide what it is, you can't fund that strategy.'
Lanese said Behlmann Automotive wants to acquire a couple of new-car dealerships and expand Car-nections.
He told Driver's Mart officials he did not believe the company could do all those things and uphold its Driver's Mart agreement at the same time.
'When you have 20 to 30 percent internal growth, it's difficult to fund your own growth, let alone get into a franchising agreement,' he said.
Lanese said he still agrees with Driver's Mart's philosophy and believes the chain will be a success.
Chairman Kenneth Behlmann said the Driver's Mart agreement conflicted with some of his company's ambitions. For example, Behlmann would like to expand the Car-nections brand to the Indianapolis area, but that territory is already held by another Driver's Mart franchisee.
Asked if his company has spoken with officials at Republic, the nation's largest and fastest-expanding dealer chain, Behlmann said he had had conversations, and was receptive to the idea of joining Republic.
'I've never met such fine people in my life as that group of people,' he said. 'If there's ever a group I'd want to be involved with, it's them.'
Lanese said he is considering the possibility of taking Behlmann Automotive public.
'To go public, you've got to be one of the best,' he said. 'And we're not there yet.'
Lanese did not rule out joining Driver's Mart.
'It's not 'no' forever,' he said. 'It's 'no' for right now.'