Does Adam Simms Have a Sale?

Plentiful as skeptics may be, Simms says, they're just plain wrong. Although privately held iMotors doesn't disclose financial results, he says his business model ultimately should translate into better profit margins than those enjoyed by traditional used-car dealerships. That's partly because iMotors doesn't need expensive showrooms: It buys cars from such major auction houses as ADESA Corp., ADT Automotive Inc., and Manheim Auctions; from lessors including Bank of America, Bank One, GE Capital, Wells Fargo, and World Omni; and from Enterprise Rent-A-Car. Simms doesn't dispute industry talk that iMotors has been incurring losses since its founding in July 1999, but he says that's to be expected for a startup.

He even portrays the Elk Grove layoffs as part of his plan, saying that iMotors was opening two other refurbishing centers at the time and wanted to balance its workforce more appropriately. While it costs $10 million to build each refurbishing center -- and he hopes someday to have as many as 15 centers in operation -- he expects that their costs will be tied appropriately into the price of each car that iMotors sells.

Simms also contends that he has a dramatically better approach to used-car warranties. iMotors backs every car it sells with a seven-day, 700-mile fully refundable return policy, plus a three-month, 3,000-mile bumper-to-bumper warranty. At most used-car dealerships, customers must buy cars "as is" or with tiered periods of coverage, during which customers and dealers split the cost of whatever breaks or falls off.

Born to Sell

It takes a tough man to shake up an entrenched business. Simms, a sandy-haired man with eyes that widen visibly when he's trying to make a point, seems to have the background for the job. Born in Brunswick, Maine, he didn't experience a traditional upbringing. As he tells it, his "home" was an 8-foot-by-30-foot trailer, which carried the Simms family to a new town every four to six weeks -- a consequence of his father's job surveying streets for the federal government. His mother was 15 years old when he was born. By the time he reached driving age, the family had lived in every state east of the Mississippi except Vermont.

After high school, Simms bounced around for a few years, working briefly at a chemical plant and later on an oil rig in Lafayette, Louisiana. When he was 20, his mother parted ways with his father and then moved to Jacksonville, Florida. There, she stopped working as a waitress and tried her hand at selling cars for a local Chevrolet-Oldsmobile dealership. Realizing that she could make good money, she invited Simms to join her.

"The thought of approaching perfect strangers was nerve-racking at first," Simms recalls. One afternoon, however, a young woman, who for weeks had been eyeing a new burgundy Oldsmobile '88, approached Simms and bought it point-blank. That first sale was "too easy," he recalls. It brought him $200 in commission -- and a rush in seeing his customer drive off satisfied. "I was hooked," he says.

By age 32, he had become head of sales for two massive dealer franchises, first in Minneapolis and later in northern Virginia. At each job he supervised more than 200 people. Married years earlier, he bought a sprawling house along the Chesapeake Bay for his wife and their young son.

Simms developed a few principles of smart selling that he still uses today: offer fixed pricing, deliver great service, and listen to customers. Indeed, Ken Hall, who hired him as operations manager of his 25-dealership franchise in Hampton Roads, Virginia, credits Simms with helping to implement fixed pricing at his organization when few dealerships wanted to do so. Former coworker Mike Schrank, 43, recalls Simms's insistence on giving his customers a toll-free number through which they could obtain price information. As Schrank tells it, few dealers were doing the same thing -- or wanted to. "The conventional thinking is, get the customer down to the lot. Period," says Schrank. "It was a little defiant on Adam's part to give them an option."

Yet Simms was restless. In 1996, he moved to Elk Grove, where he had been asked to run a new automotive superstore called AutoChoice. Conceived and then funded by the venture capitalists at Oak Investment Partners, AutoChoice was to sell a statistically driven inventory of the fastest-selling 75 cars on the market. It felt like a good idea, and business was brisk. But then Internet startups like autobytel, AutoWeb, and CarPoint.com came along with what appeared like an even better idea: offer customers comparison-shopping information online. And Simms began to forfeit customers whom he wouldn't have lost before. Armed with precise data on car choices, shoppers were no longer as willing to settle for whatever cars were in stock.