CLARKSTON, Mich. - Dealer Joe Serra's wife, Julie, thinks her husband must be going through a severe midlife crisis.
That is how she explains Serra's desire at age 39 to drag her and their children to unfamiliar Charlotte, N.C., so he can become president and COO of a new and unproven dealer group called Saturn Retail Enterprises Inc.
'She thinks I've absolutely flipped,' Serra said during an interview at Saturn North here, one of four Saturn stores owned by the Serra family.
In reality, Serra is as sane as they come. But his wits certainly will be put to the test in the coming months as he and his new boss, Don Hudler, try to pull together between 40 and 100 Saturn dealerships into a profitable, publicly traded company.
Their two biggest challenges:
Persuading independent Saturn dealers to sell their stores to Saturn Retail Enterprises in exchange for stock in the company
Persuading investors to buy the company's stock when it launches its initial public offering, probably during the first half of 2000.
In response to the growing number of publicly traded dealer groups, Saturn Corp. created Saturn Retail Enterprises late last year as an exit strategy for its own dealers.
So far Saturn Retail Enterprises is managing about 40 dealerships purchased by Saturn Corp. primarily from exiting dealers, such as Don Massey, and dealer groups, such as AutoNation Inc.
Saturn Retail Enterprises will take ownership of those dealerships - as well as up to 15 stores currently under construction - when it goes public next year.
Saturn Retail Enterprises also is negotiating to buy additional stores from more than 20 dealers, including the four Saturn dealerships owned by Serra's family. In return, the company is offering stock.
Buying dealerships for cash is easy, but persuading dealers to take stock instead will be a tough, but not impossible, sell, particularly as the stock prices of such major dealer groups as AutoNation and CarMax Group continue to flounder.
'I think there are many (Saturn) retailers who will sit out there and say, `Let's see if this thing works.' And I don't blame them,' Serra said.
That means Serra, as COO, must show that he can improve sales and profit margins throughout the new retail chain. Industry analysts say that will be the key to attracting investors and raising the stock's value.
'I think it's all earnings driven,' said Brodie Cobb, managing director of Presidio Strategies LLC in San Francisco. Cobb advises dealers on selling to dealer groups.
Jordan Hymowitz, an analyst with Robertson, Stephens & Co. in San Francisco, said the new company has a high potential for profits. It already has a well-known brand and the location of current Saturn dealerships ensures that they do not compete with each other.
Saturn also has a new vehicle, a mid-sized sedan and wagon called the L series, on the way. The success of the L series will weigh heavily on the profitability of Saturn Retail Enterprises, Hymowitz said.
Saturn expects the L series to double its sales to about 500,000 units in a few years.
Serra agrees but adds that the L series actually could delay the growth of Saturn Retail Enterprises. Some Saturn dealers, excited by the profit potential of the L series, might choose to stay independent for a few more years instead of joining the new company.
Serra didn't need his new job. Since 1982, he has been right-hand man to his father, Al Serra, at their 19-store dealership group based in Grand Blanc, Mich.
But Joe Serra said he needed a new challenge. And Hudler, former chairman of Saturn Corp. and now chairman of Saturn Retail Enterprises, needed a dealer on his team to run the company's stores.
'What (Serra) brings to us is a wealth of hands-on retail experience,' Hudler said.
Serra has taken similar risks before. A few years ago he helped found the former Driver's Mart used-car chain with Mike Maroone and other dealers. The chain later was bought by AutoNation, then known as Republic Industries Inc.