The new company, based in Los Angeles, is a joint venture of Carlson Companies, Inc. and The Rikess Group. It is the first time two industry leaders have joined forces to form a management company with such significant resources and capabilities, officials said.
The name, Arcata, is derived from a chain of words dating back to the Latin word "arcus," which means arc. It signifies the transition from the traditional auto management system to the new "customer-centered, process-driven environment."
"Dealers who are in a growth mode have two major constraints - clearly defined operating systems and the people to execute them," said Mark Rikess, president and CEO of Arcata. "So whether the dealers are attempting to grow from their existing base or are focused on managing their current crop of franchises, Arcata provides a solution.
"It serves as a guiding light. We offer the consistency of McDonald's with the customer centricity of Ritz-Carlton," he said. "Our system allows employees to reach a higher leaver of empowerment, creating a better experience for consumers and a greater level of job satisfaction for employees."
Rikess, who also serves as CEO of The Rikess Group, pointed out that with the proliferation of various automotive brands, alternative shopping, financing and buying options, including the Internet, the automotive industry is changing rapidly in the way consumers purchase and have vehicles serviced.
"As the market continues to evolve, the operation and management of automotive dealerships must progress in order for them to remain competitive, particularly in the utilization of the Internet," Rikess said. "In most dealerships, the Internet is an underutilized asset and that won't be the case in an Arcata-operated store."
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Arcata also will assist dealers in the transition from the traditional sales methods to negotiation-free selling, which eliminates the haggling and negotiation over the price of the vehicle. This transition will direct the transformation of client dealerships from "inefficient, personality-driven operations into professionally managed customer and process-focused businesses generating increases in customer loyalty and profitability," he said.
In providing outsourced dealership management services, Arcata supports the specific needs of auto manufacturers, consolidators and dealership owner-operators wanting to expand and improve financial performance of retail operations, he said.
Specifically, Arcata will place a trained general manager in each client dealership and manage all dealership functions. In addition, it will install a retail operating system addressing process, organization, management, staffing and technology requirements.
Other benefits of the Arcata approach include outsourcing traditional in-house functions, such as recruiting, advertising and customer relationship management. Rikess said this outsourcing "will create a less complex, more manageable and productive environment."
Carlson Companies, Inc. and The Rikess Group have been developing Arcata for more than a year.
Carlson Companies, Inc., based in Minnetonka, MN, is a global leader in corporate solutions and consumer services in the hospitality, travel, marketing and automotive industries. In 1999, Carlson-related brands and services generated $31.4 billion in gross system wide sales and employed 188,000 people in more than 140 countries.
The Rikess Group, based in Los Angeles, is an industry leader in "change management initiatives" that create advanced selling processes. These processes include negotiation-free selling and optimization of Internet sales. The company currently provides these services to more than 300 dealer franchises across the United States.
John Kramer, general manager of Arcata, said the hospitality industry has been successfully utilizing out-source management systems for years and believes out-sourcing will be highly successful in the automotive industry.
"One of Carlson's core successes has been the competency of out-source management of its retail enterprises, such as TGIF Fridays, Radisson Hotels & Resorts and Regent International Hotels," Kramer said. "Those same successful qualities will be applied to the Arcata management model."
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