As a race driver, Bobby Rahal won the Indianapolis 500 and a record-tying three CART FedEx series championships. He also won a lot of money: $16.3 million in CART alone, not counting his annual retainer.
Rahal might have invested in stocks or bonds and lived better than comfortably on the dividends. Yet, as a racer, Rahal was distinguished by his intelligence and drive. Fans and competitors know that Rahal does almost nothing the easy way.
He took his cash and built car dealerships. Since he launched a Honda store in central Pennsylvania in 1989, Rahal has expanded his holdings to four franchises in three locations. And since his retirement from competitive driving last season, he has focused more of his celebrated work ethic on building Bobby Rahal Automotive Group.
'Sure, I could have bought mutual funds, but I always wanted to be in the car business,' said 46-year-old Rahal. 'I grew up around cars. When I was in college, I worked at a Mercedes dealership in Chicago as a low-grade technician.
'Dealerships were an investment that would take care of my family after racing. But more than that, this enterprise is very appealing to me. I looked at the retail business as phase two of my professional life.'
There are a dozen or more dealership owners among drivers and team owners in both CART and NASCAR Winston Cup racing. But only a few have built their businesses from the ground up; fewer still take a hands-on approach to running their stores. Rahal hopes to add a franchise in his hometown of Columbus, Ohio, near the headquarters of the CART team he co-owns with TV celebrity David Letterman, and he wants to take a day-to-day role in managing that dealership.
'My name is on the buildings, and I've always made it a point that I not be an absentee owner who gets a check,' he said. 'It's something I can do that doesn't work to the detriment of my race team.'
No. 2 in Pa.
Rahal acquired his first franchise in 1988, two years after he won his first CART championship, and finished construction at Bobby Rahal Honda in Mechanicsburg, Pa., in 1989. Within two years it was the largest dealership in the Harrisburg area. Today, with 7 acres of lot space, 22,000 square feet of buildings and 58 employees, Rahal's store is the second-largest Honda dealership in Pennsylvania.
Rahal is majority owner and CEO of Bobby Rahal Automotive Group. COO Ron Ferris, who started in the business 25 years ago as a Volvo salesman, and CFO Bob Vladem both have minority stakes.
The group added a Toyota franchise in Mechanicsburg in 1991 and a Lexus franchise at the same location in 1992. In 1996, Rahal opened Bobby Rahal Motorcar Co. (Mercedes) in suburban Pittsburgh; this year, the group negotiated the buyout of a neighboring Mercedes dealership.
Bobby Rahal Automotive Group employs 200 people. In 1998, it sold 4,700 new and 2,300 used cars, and its list of service awards is as expansive as Rahal's collection of racing trophies. That list includes five President's Awards from Honda, five from Toyota and two Elite of Lexus Dealership Awards.
Yet Rahal is proudest of his group's progressive management approach and high employee retention. As a racer, he served on a number of community boards and raised millions for charity. As a dealership owner, he makes employee satisfaction as important as customer satisfaction.
'One of the things that pleases me most is that, as we've expanded, the general managers at each store have been with us from the beginning, and each has acquired an ownership stake in their franchise,' he said. 'Part of the reason we've taken a walk-before-running approach and focused on modest growth is that we want to grow our own people. There's no point in expanding if there's no one to run the stores.'
Yet expansion is definitely in the business plan. Rahal said he's close to adding his fifth franchise, though he declined to identify the brand. More will follow as the group feels it can grow without a decline in service.
'It's really dependent on a number of things: money, obviously, and franchise availability,' he said. 'The market, too. We belong in some places and not in others. We're not looking in Southern California or other high-cost markets. The most important thing to know in life is your limitations, and we do. Our approach is conservative, but I've seen too many people who have grown too fast and ruined the core of the business.'
In racing, Rahal has a special relationship with Ford Motor Co. His is considered something like a factory team, getting the latest hot technical bits sooner and doing much of the development work for Ford. So it's ironic, perhaps, that Rahal has little interest in landing a Ford franchise. Volvo, Jaguar, possibly Mazda - but not Ford. After all, one must know one's limitations.
'I'm not sure that our expertise extends to a domestic franchise,' Rahal said. 'Our capability is in the import area, and I'm not sure I'm comfortable with our ability to run a large domestic store. We'll grow with imports. We've worked hard and built our reputation in that area, and that gives us the status to acquire more stores.'
Rahal isn't shy about using his racing celebrity to promote his dealerships. The Rahal group's corporate logo features a checkered flag. The Mercedes store has one of Rahal's race cars hanging from the ceiling, and each franchise is decorated with racing trophies and memorabilia.
'I'm at the NADA show meeting people and shaking hands, because (the automotive group) has a story to tell, about quality and service, and I can do that,' he said. 'My travels in racing have created relationships and introduced me to people who can move our business forward. It would be silly not to take advantage of that.
'There's sort of a natural spillover,' Rahal said, 'a halo, if you will, between the race team and the dealerships. Each is aware of the other, that the concept of Team Rahal encompasses both.'
Rahal is convinced that 'the racing world has been the fuel for our dealership operations.' But whatever synergy has developed between his two careers, he'd rather have the car business play the larger role in his four children's lives.
'My youngest son is the only one who is really into racing, and I really would prefer him to do something else,' Rahal said. 'Racing is dangerous, and it's expensive. More so, I would hate for him to have to live up to something, some image that wasn't of his making.
'That's certainly part of the appeal of owning dealerships,' he added. 'Maybe it's the antiquated concept of having a family business, but I enjoy this game, and I'd like to give all my kids the opportunity to participate.'