Mike Stuart and Mark Moldenhauer saw the rapid consolidation in the retail auto industry during the last couple of years. But they saw nothing of the sort happening on the wholesale side of the used-car business.
So they formed Auto Network USA, a wholesale automobile brokerage that specializes in used luxury vehicles.
The company is publicly traded on the NASDAQ market under the ticker symbol ANWK.
Auto Network, based in Scottsdale, Ariz., opened its first wholesale location in Scottsdale last September, and on May 6 announced it had secured a $500,000 line of credit from First International Bank & Trust in Scottsdale.
Auto Network also said last week that it had formed its first subsidiary, Auto Network USA-New Mexico, and within a month will open its second wholesale location, in Albuquerque.
The company buys vehicles from dealers, reconditions them in its wholesale shops and sells them to other dealers.
Stuart, 50, and Moldenhauer, 44, come from different backgrounds.
Stuart spent 22 years as a manager in the Lou Grubb Automotive dealer group in Phoenix, leaving the group when he and Lou Grubb sold a Mitsubishi store they owned in 1989. He owns Specialty Cars of Scottsdale, a retailer of specialty luxury and sports car brands, such as BMW, Ferrari, Mercedes and Lexus.
Moldenhauer has spent his career as a certified public accountant, working for Peat, Marwick, Mitchell & Co., Adolph Coors Co. and others.
'Basically we feel the wholesale business is a huge, national and very fragmented part of this industry that has been overlooked and underfinanced,' said Moldenhauer.
Auto Network will use the proceeds from its line of credit to expand by acquiring and consolidating independent automobile wholesaling companies.
During April, Auto Network sold about 360 units worth about $6 million in sales, Stuart said.
Auto Network plans to concentrate initially on the Southwest. Stuart said the company eventually wants to have offices in 10 to 12 top markets.
By having a network of sites in different areas, the company hopes to take advantage of market price differences, Stuart said.
For example, a Chevrolet Corvette is a difficult sell in Detroit in January, but in Phoenix it would be a hot commodity.