ENSENADA, Mexico — Expect the unexpected, says Adam Pettis, who deals with credit-challenged customers at Bill Heard Chevrolet outside Tampa, FL.
The dealership is in Plant City, “the Strawberry Capital of the World.” Pettis has seen ragged but rich strawberry farmers in overalls plunk down $35,000 for a new Silverado pickup.
Conversely middle-aged people, who look affluent enough, can carry a lot of credit baggage, he says. Same with Florida senior citizens. They can come in with their own complete set of loan impediments.
“You can't survive in the car business if you pre-judge people,” says Pettis, 27.
Six years ago he was living in his native upstate New York, the son of a dairy farmer. One life-altering day, an elderly driver unexpectedly turned in front of his dad riding a motorcycle.
The accident left the elder Pettis with major nerve damage. A doctor prescribed a warmer climate. That's how the family ended up moving south. Son Adam went to help out. He got a job at an Acura dealership, then in the finance & insurance office of Bill Heard Chevy where about 40% of customers are sub-prime.
Pettis is good at arranging special financing, so good he won an unusual incentive trip from Centrix Financial, a sub-prime firm in Centennial, CO.
Since January of 2003, Centrix has rewarded its top dealership clients with trips to Baja, Mexico. There, they drive high-powered off-road race cars with buffed suspensions during a three-day adventure patterned after the legendary Baja 1000, a rip-roaring, speedy event of different classes, from trail bikes to tricked-up pickup trucks that can approach 200 mph.
Centrix's Baja Adventure cuts through terrain that's wild, varied and striking. It's fully engaging, a bit risky and lots of fun.
In the first five months of the off-beat incentive program, participating dealers funded $69 million in loans through Centrix, compared to $37 million beforehand. Dealers financed 4,388 contracts with Centrix during the contest, nearly a 100% increase.
“We thought dealership people were interested in more than just golfing,” says Centrix CEO Robert E. Sutton. “It seems we were right.”
He's big on Baja. He's a winning Baja driver. “Team Centrix” in 2002 began racing cars in the Baja 1000, then launched the fast-and-furious program that brings dealership folks to the little-finger Mexican peninsula below California for nearly 500 miles of extreme driving.
Participants gather at the Horsepower Ranch for an orientation on driving on raw, often ill-defined roadways ranging from craggy mountain trails to sandy desert paths going every which way and lined with cacti that can look like they're waving at you after so many hours of competitive driving, some fatigued Baja 1000 racers have reported.
“Expect the unexpected here,” says Sutton's daughter, Kate, 24, a veteran Baja driver. She calls her father “my hero” because of his passionate approach to life, business and Baja racing.
Guiding the groups are professional drivers working for an adventure company called Baja Wide Open. The name reflects the type of driving that's in store.
Still, participants are cautioned not to drive like nuts nor push themselves past their limits. Costing nearly $100,000 each, the cars are the same as those used in the Baja 1000 Adventure class.
Two main causes of accidents: driving too closely in someone's dust and reacting to peer pressure. Drivers and co-drivers wear four-point safety belts and crash helmets with built-in radios for communicating with each other and with other cars.
Centrix sees a working metaphor in it all.
Says Sutton, “We undertook the Baja program because the teamwork and creativity needed to succeed are a perfect metaphor for how Centrix does business.
“How this experience parallels our industry becomes apparent as the trip unfolds. Day after day, you build trust and accountability with the person in the seat beside you, working together to overcome the natural adversities of Baja to get the job done.”
Adds Jim Hancock, Centrix vice president of marketing, “Special financing is risky. So is Baja off-roading. Both are about managing risks, communicating with each other and altering plans to meet different situations.”
Trip winners are rewarded not just for the volume of business they do with Centrix, but also for the quality of submitted loan applications. Completeness, documentation and accuracy of customers' credit information score high for Baja.
Joining Pettis and other dealership folk on a January jaunt is Ryan Mayer, general sales manager of Tameron Automotive Group's Honda store in Birmingham, AL.
“It's not something I would have done on my own initiative, but it was great,” he says.
Growing up in Sioux Falls, SD, Mayer envisioned himself working at a dealership some day. “I love retailing and I love cars,” he says. “It's the right combination.”
He doesn't love snow. After military duty took him to the South, he stayed there rather than go home to where “there's six inches of snow on the ground three months of the year.”
When his father retired from Federal Express recently, Mayer convinced him to sell cars at a dealership back in South Dakota. “He really likes it,” says Mayer. What son-to-father advice does he give? “None, really. Everyone has their own way of selling cars.”
Also on this Baja trip are Centrix staffers and guests, including two journalists who would share an unexpected topsy-turvy driving experience on the last day.
The trek crisscrosses between the cities of Ensenada on the Pacific coast and San Felipe on the Sea of Cortez.
It flits along goat trails, dry lakes, washouts, mountain passes, switchbacks, forests and deserts. It snakes by little villages and small ranches, some terribly poor, others beautiful in their rough simplicity.
The professional drivers leading the way slow down when passing such places or encountering the unforeseen.
That includes donkeys in the road, beat-up pickups bouncing along the backcountry and young soldiers with machine guns looking for drug runners in the highlands.
“We don't blast by people's homes,” says Baja Wide Open driver Tommy Morris. “It's a matter of respect. Some of the local kids egg us on to rev it up. But then there's grandma sitting on the porch with her wash on the line. She doesn't want it covered with dust from speeding cars.”
One of the trip's toughest legs is a rocky, rutted road winding up to Mike's Sky Rancho for the final night's stay. Drivers have been known to mess up and end up in ravines.
Making it harsh on us, the late afternoon sun shines at a blinding angle as we climb to Mike's. We all manage to make it. Somehow.
“I heard two things that you don't want to hear from your co-driver coming up here: ‘I can't see!’ and ‘Where's the road?’” says Mayer.
Mike's is a secluded lodge that for decades has been a cult destination spot for off-roaders. People don't stay there for the creature comforts or nightlife. Duct tape holds worn carpeting together in spartan guest rooms. Electricity goes off at 10 p.m. when they shut down a generator, the only power source.
Yet there's a personality to the place. And you'll probably never see more stars in the sky.
Back on the road on the last day, Hancock senses a potential accident in the works. He says that this is when things can happen, when overly confident drivers can get too feisty after two days of it.
On the final stretch, I'm teamed with Adam Fisher, a senior editor at Wired magazine. He's a wiry and affable young man who quickly connects with people. He tells me that, for the longest time, he didn't drive while living in New York City.
Now he lives in California. He recently bought his first car: a used Porsche. Then he inherited a Jeep Grand Cherokee from his mother. “Friends kid me that, like that, I went from no car to two,” he says.
He got stuck in the sand the day before. Twice. In the same spot. Now he's driving again. Speeding along, we talked about how Centrix sees its Baja trips as a metaphor for doing business.
“Well, you could reverse the metaphor, and apply business principles to Baja driving,” says Fisher. He can see the world from an upside-down perspective, literally, I soon learn.
Rounding a sandy bend, we hit the unexpected — a cattle guard, a contraption of metal bars put in the ground to deter cow crossings. Fisher clips it with the right tires. The car flips. We roll completely over, landing upright.
The car is banged up. We aren't. My first thought: Thank God for safety belts. A later thought: Be careful in that Porsche, Adam.
Hancock says Centrix's Baja journey can be “life altering,” sometimes in unanticipated ways.
“We've had people return home and announce a divorce or quit a job, saying, ‘There's more to life.’ One dealership called us when that occurred, and said, ‘What the heck happened out there?’”
Such extreme reactions are anomalies, likely a release of feelings built up before Baja.
Most people go home savoring the memories, recounting the experiences and, certainly in my case, feeling awfully lucky.
Centrix Finds New Way for Sub-prime Lending
In 1998, Robert Sutton, a venture capitalist with no experience in auto finance, purchased ailing Centrix Financial, an automotive sub-prime firm in Centennial, CO.
Since then, Centrix has gone from a few dozen employees to nearly 600.
It now works with 6,600 dealerships and manages a $1 billion loan portfolio.
Special financing represents about 25% of U.S. credit customers. It's the fastest growing segment of the auto loan industry. It's a $200 billion industry that's active, but not for the faint-hearted, as evidenced by players who've left it in recent years as times got tough and default rates rose.
Sutton brings a new way of doing business to sub-prime. His business model is designed to focus on risk management and address the shortcomings of traditional approaches to special financing.
Centrix arranges loans through credit unions that, by their charters, are not permitted directly to partake in “risky” financing.
But they are intended to help those who need it. So Sutton worked out a deal with credit unions. They provide the loans, Centrix assumes the liabilities and the collection responsibilities.
Today's typical sub-prime customer is not a reckless spendthrift who runs up debts buying big-screen TVs and such.
“Divorce drills down the most,” says Jim Hancock, Centrix's vice president of marketing, explaining how regular people can suddenly become credit challenged.
He cites another reason: Medical bill collectors have become most aggressive, and their efforts can push many people without medical insurance into sub-prime levels.
“Centrix notes those changes, and understands the situations behind them,” says Hancock. “We let people know that we'll work with them if they work with us.”
The highest priority is service and collection. Centrix doesn't wait 30 days if someone misses a loan payment. “We call in three days to see if people are OK,” says Sutton.
— By Steve Finlay