A renewed Darvish returns to auto retail

CHICAGO — When retail veteran Tammy Darvish took over AutoCanada's U.S. operations in the first quarter, she knew the stores were in trouble.

The publicly traded company's financial statements showed the U.S. division was hemorrhaging cash. What the reports didn't indicate was where the money was being mismanaged. Too much allocated to employee payroll? Over budget on advertising?

Darvish rolled up her sleeves to try to stop the losses at the nine stores AutoCanada bought in 2018.

"Everything was bleeding," said Darvish, who spoke last week at the Automotive News Retail Forum: Chicago and Hireology's Elevate 2019 event.

She fired business partners, renegotiated contracts and shifted employee compensation from fixed to performance-based.

In the second quarter, she slashed the operating loss to C$1.8 million ($1.36 million), after adjusting for restructuring costs, from C$6.9 million a year earlier.

Darvish, 55, is used to the spotlight. The daughter of John Darvish Sr., founder of DARCARS Automotive Group in Bethesda, Md., entered the dealership sector at an entry level and worked her way up to executive vice president. She was the face of the company.

During the Great Recession, Darvish used her status as a voice for dealers, working with auto retail leaders to lobby for legislation to protect dealerships. DARCARS was one of many groups that had franchises terminated when General Motors and Chrysler Group restructured in bankruptcy court.

"We weren't just fighting for the couple thousand dealers that lost those dealerships, right?" Darvish said. "We were fighting for our future."

Fast forward to 2014: Darvish described her shock when she learned her family's business succession plan didn't include her.

"A little over five years ago, in the blink of an eye, in a random e-mail from a third party, I was notified there was going to be a leadership change," Darvish said at Hireology's Elevate 2019. "And I have to tell you that my whole world that I was sitting on top [of] really came down with no notice."

Darvish in 2015 filed a lawsuit against her father and DARCARS Automotive Group alleging her father had reneged on a promise to make her part of the dealership group's ownership team. A Maryland judge dismissed the lawsuit in 2016.

Darvish said she had to start over and write her first resume, which she referred to as a "white paper." She had never had one, so she hired someone to help her.

"It was hard. It was a very dark time," she said. " ... I just thought that if I don't do this, I lose."

She said entering the job market then was the scariest thing she's done.

Darvish landed an executive role at PenFed Credit Union and had a stop at Capital Automotive Real Estate Services before taking the job as president of AutoCanada's U.S. operations.

The unit needed rebranding, Darvish said. The Grossinger Auto Group was renamed Leader Automotive Group, the company announced last month. Darvish said she wanted a name with meaning that could signal a fresh start for shoppers and workers alike.

"Getting in front of the customers was the easy part, especially when you've rebranded, have a new name. It was internally that was harder ... because you have hundreds and hundreds of legacy employees who were doing things the way they were used to, [and had been] told was OK."

The name change, among other operational shifts, was marked this summer with a party. Darvish said it was the "first shot at them taking ownership of who we are and being proud."

Her advice for quickly turning around a retail operation?

"Pretend like you're back in 2009. You have no money," Darvish said. "What if this was your household? You can only earn so much money. You can only spend so much money. How do you make the best use of those dollars?"

With little budget, Darvish said they rented some chairs on a Lake Michigan beach, went to Costco and bought food and drinks. The group's leadership team dragged their own grills onto the beach and had a cookout. Managers and their families were invited to get to know one another.

Moves are on the horizon for Leader Automotive. Darvish told the Automotive News Retail Forum: Chicago that the group has a deal to buy four points. She declined to identify the stores, their brands or regions.

Darvish said the company could acquire more stores and would explore other U.S. regions if they made sense, but for now is focused on stabilizing the current portfolio and setting up each store "for constant, sustainable growth."

AutoCanada last month said it plans to sell four stores in its U.S. portfolio but did not identify them. Darvish declined to identify which stores AutoCanada wants to sell.

AutoCanada in April 2018 bought Grossinger Auto Group for $105.6 million [C$135 million]. AutoCanada has had to write down the value of the stores several times since making the acquisition.

"This is my legacy time now. Now it's time for my legacy," Darvish said. "I spent 30 years building someone else's legacy and I did a good job, right? Leadership is not a birthright. It is something you earn. And I think I've earned my position in my industry."