D&M: Auto leasing firm powers up in Fort Worth

D&M building

D&M Leasing

1400 W. 7th St.

Suite 200

Fort Worth 76102

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You’ve heard the radio advertising, especially if you’re a fan of sports talk. But you probably didn’t know just how important it was when D&M Leasing announced that it was taking over the former Whitley Penn building at 7th Street and Summit.

D&M was established in 1976 by Dallas area auto dealers Don Davis and David Moritz. The current owner – Mike Hernandez – started with the company in 1984, took over as president in 1990 and bought out partners Davis and Moritz in 2005.

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The emphasis on expanding the business from the foothold in Northeast Tarrant County and Arlington into Fort Worth proper kicked off seriously only a few years ago.

“I assumed that we were doing a good bit of business in Fort Worth because we had an office in Arlington,” said Joe Graber, president of Hernco, the parent company.

But when he looked at the ZiP codes of D&M customers, it turned out that only a small percentage of the company’s business was coming from Fort Worth.

“It just floored me. I said we’ve got to get to Fort Worth. We know that Fort Worth people don’t do business outside of town, I know not Dallas, but even Arlington,” Graber said.

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D&M leased space in a high-rise at Summit Avenue and Interstate 30 initially.

And then came the opportunity came last summer to partner with Anthracite Realty Partners to buy the Whiley Penn building at 1400 W. 7th St. Public accounting firm Whitley Penn had outgrown its space and was moving to Frost Tower, also owned by Anthracite.

A local presence is crucial for a company that curries and depends on repeat and referred customers – that’s about 60 to 70% of the business, Graber says. Radio is still important, accounting for around 30 to 35%.

There are a number of pieces to the company.

D&M Auto Leasing’s parent company is Hernco Inc., which also owns Autolease USA, dr2marketing and Dallas Lease Returns, an outlet for returned rentals. Last year, Hernco branched out, acquiring Four Stars Auto Group giving D&M Leasing customers a new purchase option and expanding the company’s reach to Henrietta, Wichita Falls and Jacksboro in Texas, as well as Altus, Oklahoma. And there’s also a financial services company, Four Stars Finance, that assists customers with loans. In 2017, the privately held company reported sales of more than $500 million and 225 employees.

Graber has been at the company for about 35 years.

“Mike Hernandez, the current owner, and I started within about nine months of each other. A long time ago,” he said.

For Chase Kennemer, Fort Worth president for D&M, it’s an exciting time. He grew up in Arlington and attended SMU. His brother Cody lives in Dallas, which makes sense because he’s the Dallas president for D&M.

“Dallas is a fun town but there’s just a different kind of person lives here,” Kennemer said. “I love the feel. I love the people. I love the small town feel even though it’s getting to be a bigger city. I like that people out here want to support local people out here”

Both brothers were honored last month as members of the 2019 Fort Worth Business Press class of Forty Under Forty. D&M was a Platinum Sponsor of the event.

Part of the effort to grow the business on this side of Highway 360 is educational.

There’s confusion about leasing, Kennemer said. They think it’s like renting a car, but it is more than that.

It’s about making the best financial decision, assisted by trained agents who will eliminate the frustrating and difficult – for most people – haggling over the price who leave a dealership thinking they got the worst of the deal even if they didn’t.

“There’s people who finance or pay cash for cars out here and I think there’s a lot better things you can do with your money than those things,” Kennemer said.

“It’s not like people here are unintelligent. That has nothing to do with it,” he said.

As cars get more complicated and technologically advanced and more expensive, auto dealers are forced to offer extended financing to keep the monthly payment affordable.

Kennemer said he’s seeing more and more 84-month loans.

That keeps the monthly payment down, he said, but it piles up negative equity for people used to trading cars every two or three years.

Many people decide what they are willing to pay monthly first and then force the car and the financing to fit into that plan.

“We try to understand what someone is looking to accomplish and what kind of car they want. We’re non-biased about the kind of vehicle,” Kennemer said. “Then we try to match the financing up correctly rather than the other way around.”

An example is securing a $500 monthly payment but being $10,000 upside down a couple of years later when the time comes to trade.

“But nothing in that conversation is about that. It’s all about, well, you know, do $500. Here it is. So that’s where we try to slow down and just be a little bit different. And that’s how we build a long-term relationship,” Kennemer said.

Graber said most people trade cars every three years and in Dallas-Fort Worth, and they drive between 15,000 and 20,000 miles a year.

“If you’re going to trade them every three or four years, you really ought to just pay for the portion of the car you’re going to use. It helps to have a company that manages that process,” Graber said.

Kelly Strausser is managing partner for Hernco, but he started, as did most people in the management chain, selling or leasing cars. And he’s proud of the company.

“We have a unique culture, a very unique environment that allows competitive people, people that have strong ethics, a strong work ethic, personal ethics, a desire to succeed, be successful here,” he said.

“We support our salespeople and our people at the highest level. We formulated a process that works and it’s a tried and true process. Our customers like it. Our employees understand it and they like it. Overall, it’s something I’m very, very proud of,” he said.

Before joining D&M, he had been selling cars for a dealer and people would tell him that they liked doing business with him but he wasn’t selling the brand of car they wanted. But that wasn’t the case at D&M. He could sell or lease anything.

He joined D&M in 2002.

Agents at D&M work totally on commission but with the support they need to succeed supplied.

“Being a D&M agent is like being a small business owner. It’s like being a franchisee where you’re provided a tried and true system that’s worked over a 40-year career,” Strausser said.

And there is infrastructure support.

“There’s no rent. You don’t pay for copies. You don’t pay for leads. The leads that come in are qualified. You have managerial support at the highest level,” he said. “That’s really how most of the salespeople want it.”

At the same time, Strausser said, the company is careful about who becomes an agent.

“We’re very selective in who we bring in and who we bring on. Once we make the decision to move forward with someone, we pour everything we have into their success and their career because at the end of the day it’s the right thing to do, one, and then two, that’s how we grow.

“We have so many of these senior people that have been here for so long and we can help them maybe grow 5% and there’s not much growth because they’re already doing so well so we grow with the new people that we bring in,” he said.

When he joined about 17 years ago, there were a couple of days of training. On his fourth day, he leased three cars.

“I knew on my fourth day that if I could do a good job with people, I could get second cars and referrals and grow my business within the overall business. I knew it was going to be a career before I started, but that fourth day really solidified my belief that this was the right career move for me,” he said

Strausser said an average monthly number of leases per agent is around 10 but they can also sell used cars, which are in high demand because they are lease returns.

Graber says the company leases and sells nearly a thousand cars a month.

Strausser was looking forward to the open house.

“So many of our customers are here in this market and Fort Worth is a fantastic market. Having an office here allows us to serve the Fort Worth community better,” he said.

The location – along highly traveled West 7th Street – is easier for both customers and agents to reach.

The head count in the new office is about 50, and Strausser said he was expecting that to increase by 10%.

The company also has had a large commercial leasing presence for years, and Graber said he is working to expand that.

“One of the things that we want to be known here for businesses is that we’re very hands-on. That’s why 75% of our business is repeat and referral,” he said.

The vehicles aren’t the hard part.

“The hard part is making sure they make good decisions, and they don’t lose money, and they’re not upside down. That hands-on approach, if you transfer that to the business commercial leasing environment, small to mid-enterprise companies like we have in the area need that kind of hands-on attention to help them manage their fleet,” Graber said.

Those kinds of decisions often fall to the business owner or other people in the business who do not have the experience – or the time – to do it.

“We help them acquire their fleet. We help them lease it, and then we help them with all the management tools, all the reporting and telematics and gas cards, and all that kind of thing that help them understand their total cost of ownership,” Graber said.

The company has strong customers in Dallas and Tarrant Counties and in the oil and gas business, but it is a part of the company that isn’t very well known, he said.

“But we do it very well,” Graber said.

This article includes material from Fort Worth Business Press archives.