DriveTime Automotive Group Inc. is an American used car retailer and used car finance company. It is based in Tempe, Arizona, and sells and finances cars for customers across the country. The company was previously known as Ugly Duckling and renamed to DriveTime in 2002. The company also separates Carvana and GO Financial, SilverRock Group Inc., and Bridgecrest Acceptance Corporation. By 2018, DriveTime has about 145 locations in the U.S. and 3,800 employees.
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Operation
DriveTime is a privately held company headquartered in Tempe, Arizona. The company's business model is focused on selling previously owned vehicles to car buyers. It uses an exclusive crediting model to finance car purchases at its dealer in-house, including subprime loans.
DriveTime buys 150,000 cars annually at various auctions. After the auction, the company placed the car purchased through a 14 day inspection at one of 24 inspection centers. It makes the necessary repairs before sending the vehicle to the dealer. Approximately 8 percent of cars purchased at auction do not pass the inspection process and are not sold through the dealer.
The company is owned by its chairman, Ernest Garcia II, who bought the company that became known as Ugly Duckling in 1991, and Ray Fidel, who was his former president and CEO. The company has about 145 locations in the US and by 2015, employs over 3,800 workers. In addition to its headquarters in Tempe, the company has an operations call center in Mesa, Arizona and a collection center in Dallas, Texas.
It also encourages employees to create startup companies. The sister companies spun from the company include GO Financial, Carvana and SilverRock Group.
DriveTime ranks 3,793 on the list of the 5000 fastest growing companies after posting $ 2 billion in revenues and adding 1,192 jobs by 2014. DriveTime was ranked No. 1. 15 at Computerworld's 100 Best Places to Work on IT list in 2015.
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History
Fine Duck
DriveTime originated as a car rental business based in Tucson, Arizona named Ugly Duckling, which was founded in 1977.
Thomas S. Duck, Sr., retired from insurance sales, started Ugly Duckling Rent-A-Car Corp. in 1977. In 1985, with a successful car rental business and a company like Budget Rent a Car worked well, Duck's company was the number five car rental company in the United States, with 600 franchises. Finally, the Ugly Duck filed for bankruptcy in 1989; Ernest Garcia II, who studied business at The University of Arizona in Tucson, and criminals convicted of his role as a straw borrower at the Lincoln Savings and Loan Association collapsed, forming Duck Ventures, Inc. in 1990 and bought Ugly Duckling's assets. Then he started Ugly Duckling Holdings, Inc. and make Duck Ventures a subsidiary.
Ugly Duckling owned two car dealerships, one in Phoenix and one in Tucson, in 1992. The company bought three more dealers but added four new dealers, giving them an appearance that was comparable to standard dealers, rather than the unpleasant look that many subprime have. One dealer was closed in 1994 because it did not fit into the new image. Ugly Duckling also tried experiments in Gilbert, Arizona, selling newer and more expensive cars, but eventually sold the dealer in 1995.
In 1994, Ugly Duckling bought Champion Financial Services from Steve Darak, making Darak Chief Financial Officer. The company has a new source of income - buying installment contracts from other dealers, still considered subprime, but from more affluent customers than the usual Ugly Duckling.
Ugly Duckling helps customers in several ways. The company prepares tax returns and lets people use the refund they expect for advance payments. The Company allows people to obtain Visa credit cards by paying a deposit to Visa. Also, those who make payments on time can refund their advance, usually 10 to 15 percent of the purchase price. Dealers have repair services, and buyers can get repair contracts. And unlike most car dealers, Ugly Duckling lets customers make payments with cash.
In 1996, Garcia took the company, then based in Phoenix, Arizona, public on the NASDAQ exchange, where the company traded as "UGLY"; This generates $ 170 million for businesses. At this time, the company has gained regional fame; William Gibson, an analyst of Cruttenden Roth, said in 1996 Investor's Business Daily, "You go to Tucson or Phoenix and people know The Duck, it's an icon in those cities."
Ugly Duckling was getting out of the rental car business. 100 franchises were closed in August 1996, and another 40 will be closed for the next ten years as their contract expires.
GE Capital increased its credit limit to $ 100 million in 1996. With new funding sources, Ugly Duckling started a major expansion program. The Company purchased five dealers and $ 25 million in a financial contract from Seminole Capital Corporation in Tampa/St. Petersburg area. For $ 26.3 million, Ugly Duckling bought some of E-Z Plan Inc.'s assets. from San Antonio, Texas. It also opened its first dealer in Las Vegas, Nevada and opened two dealerships in New Mexico. In August 1997, the company had 24 dealerships in five states, and 64 branches in 17 states. Through the branches, Champion bought a financing contract from 2710 dealers. Many of these contracts require accident insurance; Ugly Duckling goes into the insurance business, buys policies for those who are asked to do so. Drake Duck Insurance Agency Duck does this through the American Bankers Insurance Group, and offers other types of insurance as well.
Another business area is Cygnet Finance, Inc. the Ugly Duckling began in September 1996. This subsidiary offers financing for car dealers who can not.
The Ugly Duck became profitable and increased the number of its employees from 652 in early 1997 to 1776 nine months later. A larger percentage of the company's revenue comes from financing, and November 11, 1996 Washington Post says Ugly Duckling is "a bank disguised as a used car."
However, in 1999, Ugly Duckling left the finance business; Garcia bought Cygnet and Champion closed. At the same time, Ugly Duckling developed its own software, and CEO Gregory Sullivan said that the company was the only one who bought a car dealership in 1999. Markets added include Orlando, Florida and Richmond, Virginia.
In 2001, sales reached $ 541.7 million, and the headquarters moved to the Mega food store. Ray Fidel, former president and chief executive of DriveTime, began working with Ugly Duckling in 2001 for preparing to return to being private.
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Garcia owns 65 percent of the ducks in January 2002. That same year, Garcia and Sullivan bought the rest of the company's shares. Company officials renamed the new private company DriveTime effective on September 1, 2002, under the registered name DriveTime Automotive Group intended to differentiate auto sellers from educational companies Az Drive Time. The company operates 76 dealerships in eight countries when DriveTime seeks to expand its reach in the US. O'Leary and Partners took over advertising in May 2003.
Prior to their involvement with DriveTime, Garcia and Fidel were known to be associated with the Lincoln Savings and Loan Association scandal during the savings and loan crisis in the 1980s and 90s. Garcia pleaded guilty to fraud charges in 1990. Fidel, Lincoln Savings and former president Loan, pleaded guilty to securities fraud in 1991. Both received a three-year probation sentence. Federal judges praised them for pleading guilty and assisting inmate Charles Keating, who manages Lincoln Savings and Loan.
The company announced plans on November 2, 2004, to expand from 75 to 100 locations over two years, mostly in the Southwest United States and in Florida, Georgia and Virginia. DriveTime employs 2,100 and the revenue at the time was $ 729 million. Part of the company's success resulted from many job losses and bad loans, as the American Bankruptcy Institute reported the highest level of bankruptcy ever, although in 2004 fewer people filed for bankruptcy. In 2004, Garcia chairman owns 85 percent of the company, Latino's largest company in Arizona.
In 2004, former president and CEO Ray Fidel said DriveTime intends to treat customers with the same financial problems as customers at premium automotive dealerships.
In 2005, DriveTime has added Austin, Texas and Norfolk, Virginia and sites planned in Charlotte, North Carolina and Nashville, Tennessee. As the company grows, Auto Dealer Monthly and AutoTrader.com recognizes Fidel as the top independent retailer. By the end of 2006, DriveTime has more than 90 locations in nine states. The company opened its 100th DriveTime dealership in Concord, North Carolina, northeast Charlotte, in 2007. The company also announced the completion of a new lending center in Mesa, Arizona, replacing one in Gilbert, Arizona, with 100 employees hired immediately and 300 more planned.
CarMax of Richmond, Virginia filed a lawsuit in US District Court claiming that DriveTime offered a bribe to CarMax sellers to every customer they call DriveTime, a violation of RICO. DriveTime general advisor Jon Ehlinger denied the allegations and said the company would "fight hard" to fight to clear its name.
DriveTime encourages its employees to develop new companies. In early 2010, he launched GO Financial. The new company began in 2011 as a division of DriveTime, offering subprime retail financing, before it became its own business. In 2013, DriveTime introduced Carvana as a used e-commerce car dealer run by Ernie Garcia Jr. in Phoenix.
Consumer Protection Bureau Consumers of the United States charged $ 8 million civil penalties to DriveTime for debt collection practices in November 2014. The agency stated that DriveTime repeatedly mentions late customers with payments, including calls to the customer's workplace, and reporting them inaccurately to credit bureaus. DriveTime is the first "buy here, pay here" business targeted by the Consumer Financial Protection Bureau, created in 2010 after the 2007-08 financial crisis. DriveTime agrees to pay the fine and change the collection process to comply with the rules. The agreement also includes strict supervision of DriveTime credit collection and reporting by the Consumer Financial Protection Bureau for five years.
Based in Phoenix since its inception, DriveTime moved its corporate headquarters into a 97,000 square foot space in Tempe in November 2015. Carvana then moved to former Phoenix facility owned by DriveTime. Also in 2015, the company separates the new sister company, SilverRock Group, which offers insurance and warranty services.
By 2015, the number of car dealers owned by DriveTime exceeds 130 and by 2018, the company has 145 dealers nationwide.
In 2017, the company shifted its business model to focus on providing newer model vehicles to customers with lower mileage.
Spin Offs
Bridgecrest Enterprise Reception
Launched in April 2016 by DriveTime, Bridgecrest's service installment contract for DriveTime and affiliates. With a spin off, Bridgecrest takes over more than 220,000 customers previously serviced by DriveTime Acceptance Corp.
Carvana
In 2013, DriveTime became the majority owner of Carvana; both companies are fully operated separately. Carvana was founded in 2012 and launched nationwide in November 2013. The Phoenix-based company is an online used car retailer. Car buyers use the Carvana website to view inventory, apply for financing, and arrange for pickup or delivery. The company has used vending machines in major cities like Atlanta, Georgia, and Nashville, Tennessee, where customers can pick up cars they buy online. These startups can take advantage of existing infrastructure in DriveTime, such as service facilities.
GO Financial
Go Financial is a subprime loan financing. It is located in Mesa, Arizona. The company was incorporated in 2011 and separated as its own company in 2013. Cox Enterprises, which has an online market AutoTrader.com and Kelley Blue Book, a car valuation and research company, bought shares in GO Financial. It serves 2,800 dealers in 46 countries.
Go Financial stopped generating new loans in May 2016
SilverRock Group
SilverRock is a warranty company in Mesa, Arizona. SilverRock employs 150 people and is supported by DriveTime Group. SilverRock's focus is to provide additional customer-centric products and claims processing.
SilverRock manages a variety of additional products including vehicle service contracts, GAP coverage, vehicle theft protection/GPS tracking, dealer fleet management, and vendor management. In 2018, the company has issued more than 700,000 service contracts, GAP products, and warranties and paid more than $ 300 million in claims.
Primary competitors
- AutoNation
- CarMax
References
External links
- Official website
- Driving time
Source of the article : Wikipedia
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