Smart Choice Automotive Group Inc., a recent entrant into the publicly owned dealership game, plans to open six additional used-car dealerships in Florida.
The stores, which will cater to customers with credit problems, will be in West Palm Beach, Melbourne, Titusville, Lake Worth, Largo and Brooksville. Smart Choice already operates 11 used-car stores in Florida and has agreed to buy two new-car dealerships. Manufacturers have not yet approved the deals.
In addition, Smart Choice has leased Imperial Auto Auction in Lakeland, Fla., which will serve as the central reconditioning center for all its Florida stores. Imperial, formerly a Manheim auction, should be able to recondition about 2,000 cars per month, according to Fred Whaley, Smart Choice chief financial officer.
Gary Smith, president and CEO, said the company plans to have 30 locations by the end of the year. In addition, Smart Choice operates Nissan and Suzuki new-car outlets in Stuart, Fla., under management contracts. The company also announced it plans to purchase Angus Motors Inc. (doing business as Universal Motors) in Cocoa, Fla. The dealerships sell Acura, Audi, Volkswagen and Subaru. Smart Choice is awaiting manufacturer approval before announcing the purchase of the Stuart dealerships.
GOAL IS BETTER CREDIT
Smart Choice's long-term goal is to help its used-car customers improve their credit, Smith said. When they are in good standing, the company hopes to steer them to its new-car stores in the same markets, he said.
The used-car stores will be called Fir$t Choice Auto Finance and will stock up to 150 cars. Monthly turnover should be 100 to 125 units.
The typical customer Smart Choice wants will have low to moderate household income, some credit difficulties and will be shopping for a car that sells for $10,000 or less, said Ron Mohr, vice president of investor and public relations.
With the exception of Titusville, which will be a greenfield site, the stores will be located in existing used-car dealerships.
Smart Choice prefers to keep experienced operators in place, Smith said.
'We're not interested in any learning curves. I'd rather buy somebody who's successful.'
First Choice will provide financing for its used-car customers through its Florida Finance Group subsidiary, which holds about $22 million in net receivables.
UGLY DUCKLING LED THE WAY
Smith said his company watched as Ugly Duckling Corp. built a series of self-financed used-car dealerships in five Sun Belt states. Ugly Duckling has become one of the sleeper success stories of the automotive retailing revolution. Smith admires the work of Ernest Garcia II, Ugly Duckling CEO.
'He's paved the road,' said Smith. 'All we have to do is get on and drive carefully.'
Garcia said he has met Smith and respects what Smart Choice is doing.
'The market's plenty big for them and 10 others,' he said. 'If they execute their business plan, they should do fine.'
Smart Choice came into being this year when three used-car dealerships merged with Eckler Industries Inc., one of the nation's largest suppliers of Corvette parts and accessories.
By merging with Eckler, Smart Choice got a corporate headquarters it would otherwise have had to spend $1 million to build, Smith said. In addition, Eckler already was publicly traded, so Smart Choice did not have to do an initial public offering.
Smart Choice has concentrated on three Florida markets: West Palm Beach, Orlando and Tampa/St. Petersburg. In addition, the company has acquired three automobile finance companies with about 5,000 retail customers. Smart Choice Automotive Group also operates insurance and dealer consulting divisions.