Opening a dealership is never easy. Along with the usual startup problems, dealer Mike Dever has had to weather a rough winter at his new Drive 1 used-car lot, which opened in late December.
But Dever has had at least one pleasant surprise: the quality of his customers.
'We seem to be attracting a lot of people buying second cars in the family,' he said. 'You know, the good-credit people.'
Drive 1 is a franchised used-car dealership concept developed by Ted and Becky Catino, the husband-and-wife owners of franchisor Drive 1 Ltd. and Security National Automotive Acceptance Corp., a prime and subprime finance company in Mason, Ohio. Dever, president of Performance Automotive Network, a five-store new-car dealer group in Cincinnati, is Drive 1's first, and for now its only, franchisee.
Dever opened the first Drive 1 store in the Cin-cinnati area on Dec. 28. The Drive 1 store is not tied to any of his new-car dealerships.
He plans to open two additional area stores during the next three to four months, and he wants more. The average investment per store is about $700,000, Dever said, not including inventory.
'The synergy that makes it work (in a market area), I think, is four or five locations,' he said.
The first Drive 1 store so far is selling about 35 used vehicles per month, to Dever's satisfaction. Dever believes a recent increase in advertising will boost monthly sales to 50 units beginning this month.
The biggest surprise has been the mix of customers. Dever estimates about 65 percent of the store's business is with buyers with A- and B-rated credit.
The Catinos introduced Drive 1 to potential franchisees at the 1998 National Automobile Dealers Association convention in New Orleans. Through strategic partnerships, a Drive 1 franchise offers established financing and credit processing programs, vehicle warranties and dealership management software. Drive 1 also is supported by a Web site, www.drive1.com, which allows consumers to browse the inventory at Dever's store.
Steve Gallagher, director of franchise operations at Drive 1 Ltd., said franchisees will pay a one-time licensing fee and a monthly fee per vehicle sold, but he would not say how much the fees were.
Dever expects new-car dealers and independent used-car dealers to sign up with Drive 1 once he opens his two other stores and begins building Drive 1 as a retail brand.
Said Dever: 'We got a lot of people interested in the project, but we really haven't had anything to show them as of yet.'