Article

DriveTime 93 Used Car Stores And Counting CEO Ray Fidel Named 2006 Independent Retailer Of The Year

September 2006, Auto Dealer Today - WebXclusive

by John Carroll - Also by this author

With a lineup of 93 used car stores scattered around the country, Ray Fidel, the CEO of DriveTime, gets to tour the frontlines often. Even though his arrival is typically signaled well in advance, Fidel's not looking for red-carpet treatment or a choreographed welcome.

Rather than try to catch his employees in candid surprise, he's more interested in objectively sizing-up their approach to the business and getting a feel for the way the operation works – warts and all.

Call it a gut-check inspection.

"Just like when you walk into the house of a friend," says Fidel, who had been on the banking side of the car business before he took over the reins at DriveTime. Fidel is always looking for the kind of natural ease in employees who can frankly talk about not just their successes, which are recognized and welcomed, but their frustrations. If everyone stays guarded and relentlessly upbeat, he knows he has hidden problems bubbling under the scrubbed veneer.

"If no one is telling you their problems, you know you're in b.s. land," says the plain-spoken Fidel. "That’s my job. I’m not just going out to look at the good things and pat them on the back." Instead, he's out there learning things, solving problems and confronting thorny issues.

Says Fidel: "I'm not a motivating presence, and I'm not just a technical guy that just wants to look at the numbers." Even though, the numbers look good. Last year, DriveTime sold more than 54,000 cars and trucks, more than 4,500 vehicles a month, all in the sub-prime market. This year, he fully expects to hit right around the 60,000-vehicle mark -- a pace that easily qualifies the company as a market leader. Born as Ugly Duckling in 1992, the company went public in 1996, was then taken off the market and now privately held, was rebranded as DriveTime four years ago.

With more than a billion dollars worth of assets, DriveTime now manages dealerships in eight states and 14 major metropolitan neighborhoods, including Albuquerque, Atlanta, Austin, Dallas, Norfolk, Las Vegas, Los Angeles, Orlando, Phoenix, Richmond, San Antonio, Tampa and Tucson. Fidel lays claim to a unique market niche, falling somewhere above the buy here pay here level with a more tailored program for credit-challenged customers. The idea is to marry a market-envying approach to customer service, quality vehicles and innovative credit options. Every car gets vetted through a 53-point checkup and vehicle history report, and everyone drives away with a limited warranty.

DriveTime’s track record covers more than 300,000 sales with more than $3 billion in contracts. That kind of growth and leadership has earned Fidel this year's title as Independent Dealer of the Year by Auto Dealer Monthly.

To keep growing, DriveTime and Fidel are in perpetual motion. The company has to source about 75,000 vehicles a year. Virtually all of those vehicles have to drop into that sweet spot of $5,000 to $9,000 at the auctions. Steady expansion has forced DriveTime to switch from regional buying to more cross-country shipping arrangements at a time when gas prices are near an all-time high, and he needs all 2,000-plus employees in all eight states to work as a team in finding every last dime of savings. His business model doesn't allow for all of those higher costs to be simply factored into his retail price.

DriveTime customers who qualify for those cars typically have a FICA credit score of 450 to 580, but there's much more than a numbers game involved in qualifying a customer. "You're looking at how thick and thin their file is," says Fidel, "what is in their credit; not just the score itself. And how are they trending?"

To better understand how likely it is that they can pay off their car loan; DriveTime has developed a proprietary system that provides a predictive measure of creditworthiness. Residency and debt information and a whole variety of factors are fed in. The system is constantly being upgraded with the knowledge garnered from the day-to-day experiences of the country's leading sub-prime operation. The fifth generation of the company's grading system is being rolled out now.

“The formula for what goes in the credit grading system may be complex”, says Fidel, “but the final program that winds up in employees' hands is intended to be simple”. Instead of relying on an intensive new round of training for everyone in the company, he wants a program that simply lays out a new series of questions. The program does the bulk of the work and provides all of the answers.

That still leaves plenty of challenges – and a set of great expectations -- for employees. “In order to fix the inevitable problems that crop up each day,” says Fidel, “you have to have a work force that understands it has to be up front and communicative”. Management is expected to set that pace.

"You don’t know at first if they're just talking the talk and not executing," says Fidel. What you're looking for is execution; holding staff turnover down, maintaining sales and creating an environment so that when the market softens and everyone around you is hearing about percentage declines in sales – and even though you may dip – there's a strong culture that performs up-market and never drops to down-market level. The people factor is what will carry you through the tough times.

No customer should leave a store unhappy by the way they were treated. For that, everyone at DriveTime is charged with creating a positive retail experience unlike any this group of credit-starved customers is used to seeing.

This is what Fidel wants to hear back: "I understand I'm paying a higher rate and what you're doing in providing this car in this target market, but I've never been treated with that much respect and understanding relative to where I am."

What he doesn't want to hear: "You talk a big game just like every other store around."

It's a message that is reinforced at every point a customer comes in contact with the company. Jon Ehlinger, DriveTime's general counsel and spokesperson, notes that the company Web site (drivetime.com) has just been upgraded so that anyone surfing the Net will understand DriveTime is a customer-friendly operation.

"It's much easier to find out what makes the difference between us and our competitors," says Ehlinger. That may be a relatively narrow opening, but what sets DriveTime apart is that it never misses a chance to make a good impression.

"You have to teach people that there is no big wow moment," says Fidel. "It's about tiny execution points; how you handle it all the way through. Customers are looking for the same thing you and I are looking for: respect and peace of mind. If you're going to build a brand, build it with that in mind."

DriveTime doesn't just love em’ and leave em’ to some other finance company, either. The company collects on a portfolio that's grown to more than $1 billion. Collections remain locally through 59 days. Fidel recently inked a multimillion-dollar deal with Affiliated Computer Systems in Dallas to make sure all his stores had the technology in place to stay on top of each sale and each collection process. This technology platform is capable of taking DriveTime's portfolio past the $2 billion mark.

The thrill may be in the sale, but DriveTime has to stick with their customers all the way through the collections process. All workers are expected to handle themselves the DriveTime way throughout the transaction. Even if it comes to a repo, they maintain the same respectful approach that characterized the way the customer was treated the day of purchase.

That's the kind of approach that Fidel believes will carry DriveTime on to becoming a much bigger company. By early next year, or possibly even as early as late '06, Fidel intends to pass the 100-store mark. One of the next openings in the march ahead is slated for Charlotte, N.C. DriveTime is likely to open at least four stores in the Charlotte area as it follows through on a strategy of developing retail clusters to get the maximum leverage from regional advertising campaigns and re-supply opportunities.

The company has previously experienced rapid growth. In 1996, four-year-old Ugly Duckling went public when sub-prime operations were Wall Street's darlings. That faded and so did the company's stock price. In 2002, when the stock was trading at a discount, the company's biggest shareholder didn't see much upside in the public markets. Ugly Duckling went private again and Fidel came in to position DriveTime for the road ahead.

"Others had wanted the company to be entrenched in the used car industry," says Fidel. "They hired used car managers. We were interested in being in the used car business, but we said let's run it completely different. We're not necessarily hiring used car people. We're going to do things differently, both in buying and collections. It's a different retail mentality.”

To do that in a rapidly growing company, Fidel has to constantly be on the lookout for new managers. Some may come in from other car operations, though Fidel is quick to add that they can often present a challenge in training. Roughly four out of every five people coming in as managers don't have car sales experience. Maybe they were in banking or ran a restaurant. The same goes for the company's buyers; they don't necessarily have to be longtime car people. Instead, DriveTime chooses to invest more time and money in their training, so new hires understand the DriveTime way without importing any previously learned bad habits.

"That used car salesmen; I'm trying to get away from that pressure. We're trying to create an experience that says, ‘We're not hyping things, we're trying to hire more forthright people and explain how customers can work their way out of where they are,’" notes Fidel.

That approach has helped create a positive work environment. Employees have anonymously sent in enough glowing recommendations to be cited as one of the best places to work in Orlando and on its home turf in Maricopa County, Arizona. Other awards have come for its hot growth, partnering up with local schools and corporate volunteerism.

"I am not just looking for happy employees," notes Fidel, "A lot of times you have to take a company through something more meaningful that’s not necessarily making more people happy. You're collaborating with people who have differences, you work through things, create dialogue. That isn’t always going to get you a survey where everyone rates the company as a great place to work. Sometimes, people leave our company because it's not the right company for them."

That's a price for growth and consistency that Fidel is willing to pay. Every time he hits the road again, he can see firsthand, the returns have been strong.

Vol 3, Issue 6

Comment

  1. 1. Stephanie [ September 24, 2014 @ 12:25PM ]

    i hate this company. I was sold a bad car and it's breaking down by the day. Drive time refuses to help me in any way I have asked for a different car for them to help pay for the repairs and I get nothing I get told it's not their problem. For a company that says they are honest and sell good cars and great prices is a total lie. I bought an 05 Dodge Durango with 89000 miles on it for 32000 dollars how is that a fair price. All I want is a refund of my money or a different car and no one at this multi billion dollar company seems to care. So thanks drive time for nothing but a piece of crap car

  2. 2. Dee [ November 03, 2014 @ 08:55PM ]

    I am with you Stephanie, this piece of crap company did the same thing to me, why don't you get in touch with the Better Business Bureau in Arizona, Let them put the word out, that's what I did. You can't just let this happen to people. They sell terrible cars for a lot of money then they tell you to go to hell.

  3. 3. Terry [ January 27, 2015 @ 11:59AM ]

    me too this company is a piece of crap of cars brought a car Jan 2 2015 piece crap 1500.00 down it only last not even a day then they telling me in need to make car payment I have been on phone for 3 weeks during the 72 hours the store manager had played dodge phone and then when I went to location employee stated he wasnt there now my payment is due tomorrow and they telling me I need to make car payment really for what ??????????????????????????????........

  4. 4. jasmin [ March 05, 2015 @ 04:43PM ]

    This company is scamming people out of money...Tell Fox news your story

  5. 5. MH [ April 03, 2015 @ 04:25PM ]

    that's just like rich folks get rich on the backs of working class and middle class people Ray Fidel you scum I bet your family eat every night and great Drivetime is going down

  6. 6. Harry [ May 05, 2015 @ 03:43PM ]

    Know what? After such fan-fare you'd think there would be the hint of truth to something that was said. Yes, they are growing "off the backs of working and middle class people. Bu, isn't that America...The American way when the rich get richer and the poor get "hyped" with hopes for a better tomorrow.
    I think the joke is on us...who reads this anyway? Sure, we can comment, but who could give a damn? Really, how do you contact people to do something about the "scam" they're running anyway?

  7. 7. John [ June 08, 2016 @ 09:03PM ]

    Has anyone tried writing the CEO of the company? I had to do this with my insurance company after I wrecked my truck the day before christmas. It wasn't until the latter part of March before I was able to get my vehicle taken care of. This is after I had racked up over $1,400.00 in rental car charges and they only covered $25.00 a day for 10 days. What a joke! Now I am buying a 2008 GMC acadia from drivetime/bridgecrest that I purchased on March 5th 2016 and had to take it to the shop the very next day to have the A/C checked just to find out that there was no freeon at all in the system. I called today because I am still having problems with my A/C and they advised me to go back to the mechanic that previously worked on it. This will be the 3rd time that I have taken it to the mechanic for the A/C not cooling since I got it in March 2016.

  8. 8. Yvonne Farr- Schindel [ June 28, 2016 @ 12:18PM ]

    The Ceo of the Company Ray C .Fidel Pled Guilty in 1991 to Securities Fraud in an S & L Scandal . He was President of Lincoln Savings and Loan. Then in 1993 he was also named and found guilty in the Nations costliest Thrift failure. Along with Irvine Thrift and Ernest C, Garcia II. There are Class Action lawsuits cropping up allover the place concerning DriveTime, better get yourself on one. I intend to pursue this to the highest level and am not going away until Ray C.Fidel and Drive Time resolve my situation, and honor the supposed warranty that the sales person led me to believe I had. I have both a lawyer and a News reporter in the family, as well as being a free lance writer myself.

  9. 9. Carolyn [ July 07, 2016 @ 11:40AM ]

    Drivetime is a rip off and the CEO does not accept calls. Well, I have been jumping through hoops since I drove from Mobile. They hand you off from Drivetime to customer relations to finance to the mechanics. I would not recommend a purchase from them no matter how good it sounds, they are a RIP OFF! Bridgecrest and customer service are both jokes. It is beyond me. Raymond Fidel, CEO have people talk on his behalf. I wouldn't be surprised if he were fake.

  10. 10. Carolyn [ July 07, 2016 @ 11:41AM ]

    Scam and RIP OFF

  11. 11. CHASE [ September 08, 2016 @ 05:54PM ]

    THIS PLACE IS A JOKE DON'T BUT A CAR FROM HERE

 

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

Blog

On-the-Point

Jim Ziegler
A Faster Horse

By Jim Ziegler
The Alpha Dawg wonders where the demand for driverless vehicles is coming from and has good news and bad news — but mostly bad news — for Fiat Chrysler and Cadillac dealers.

Strangers in the Mall

By Jim Ziegler
The Alpha Dawg makes new friends, stands up for Cadillac dealers, charts the rise of the independent lots, and reconsiders free trade agreements.

You Can’t Handle the Truth

By Jim Ziegler

Watch Out for Grizzlies

By Jim Ziegler

Opening Observations

Over the Curb