Profile of a start-up reconditioner of classic American muscle cars.
Joseph J. Bianco, founder of American DreamCar Inc., is betting that America is ready for $20,000 reconditioned Mustangs and GTOs
Investment banker Joseph J. Bianco sold his sports-car importing operation to General Motors Corp. in 1987. Confronted by middle age and without a company to play with, the self-admitted auto fanatic was nostalgic. "I owned a '67 Camaro when I was a kid," he moons, "and I loved that car." So using himself as the typical customer, he designed a business that would "bring back cars that were everyone's dream when they were young," he says.
Brisk as the market for classic vehicles was and still is, Bianco found no one doing what he envisioned -- buying up old specimens from the late 1950s, '60s, and early '70s, completely reconditioning them, and selling them by the thousands through licensed dealers. Such a company could breathe life not only into his own beloved Z28, but also into the other whimsically gewgawed muscle cars beloved by baby boomers -- GTOs, Chargers, Mustangs, Road Runners, even Cadillacs, each a powerful (250-horsepower on up) representative of the country's last great automotive era.
On that premise, in November 1988 American DreamCar Inc. (ADC) was formed. But authentic restoration, because it's so hopelessly slow and expensive, was left to romantic purists. American DreamCar's coldly commercial version restores the aged hulks on an assembly line, a half dozen at a time. Costs are kept down by standardizing parts, and profits kept up through systematized production. That way, Bianco figured, margins should come in above those of today's new machines -- way above, once economies of scale kick in.
The challenge of kicking in those economies before the money runs out has fallen to an industry lawyer named Robert Gil Seasonwein, first enlisted by Bianco to check out the legal ramifications of selling reconstructions on a like-new basis. The idea wouldn't be feasible if the cars' reconditioned but nonetheless old motors had to meet emissions regulations for new cars or if their battering-ram chassis had to comply with current safety standards. Nor would it do if, starting out under another's brand name and still looking very much like it, a product labeled American DreamCar got ensnared in trademark and fair-use bickering. When Seasonwein came back in favor of proceeding, Bianco hired him to do just that and faded into the background as the company's chairman and largest shareholder.
Spurred by $1.75 million in seed capital that Bianco's initial equity placement coaxed from a handful of believers, CEO Seasonwein searched for manufacturing facilities. He settled on Cleveland, where in August 1989 American DreamCar moved into 29,000 square feet of leased factory space. Although other cities had cheaper real estate, none proffered Cleveland's main lures: local suppliers and inexpensive skilled labor. Last July, ADC was employing some 20 skilled laborers at an average wage of about $14 an hour. If paying salaries of $30,000 a year sounds untenable to manufacturers in other industrial areas, doubters should note that ADC's first help-wanted ad for auto-shop specialists drew 60 inquiries, and the company has not yet found it necessary to run a second.
The finished ADC product, although unabashedly a rehab, boasts not only a body that is identical to the original (accompanied by original title) but also an engine that outperforms it. In fact, argues Seasonwein, who worked his way through law school as an auto mechanic and car salesman, a DreamCar is likely to be reassembled more precisely in Cleveland than it was originally assembled in Detroit. That's one justification for showroom stickers that range from $19,995 to $27,995, of which ADC receives three-quarters.
After a muscle car is acquired, it is eviscerated. The engine it arrives with is sometimes reconditioned, but most often unceremoniously junked and replaced with a one-size-fits-all Chevy 350 -- no Schwarzenegger, but acceptably brawny nonetheless. Its transmission, suspension, brakes, shocks, steering box, and other mechanisms are likewise gutted and modernized. It is given tires, a sound system, and air-conditioning; each model's decorative kitsch is authentically revived, and its body is stripped bare and painted. All that takes place in a handful of specified work areas -- disassembly, power train, and such -- until it arrives at final assembly, where the body is put back on and the car rolled out the factory door.
Meant as much to be motored as admired, the now-gleaming hybrid -- cosmetically '60s, mechanically '90s -- is promoted in sales material as "the best of both times." Whatever marketing boost is needed beyond ADC's generic brochure is up to individual dealers to provide. Even though it hasn't yet been determined whether there is a market for such cars, Seasonwein says that whenever the concept was shown to a target audience -- aged 35 to 60 -- people were wowed by the product and the affordable price.
ADC has no intention of competing in the primary-transportation market. The strategy is to gain a fraction of an undefined but obviously large and still-growing market -- Road & Track recently reported that 38% of its readers owned pre-1968 cars -- by pitching DreamCars as head-turning showmobiles. Seasonwein himself cruises to ADC's Bethesda, Md., headquarters in a yet-to-be-reconditioned '57 Bel Air Sports Coupe.
In addition to concerns about the continued availability at reasonable cost of the company's basic resource -- the original cars -- Seasonwein has to juggle typical manufacturing factors such as labor, shipping, inventory, and distribution. He also must worry about committing to prices of finished products whose costs are not all that predictable. In its first six quarters ADC spent $1.2 million of working capital. But $200,000 a quarter is a snail's pace compared, say, with John De Lorean's luxury-sports-car start-up 10 years ago, which devoured $15 million a quarter during its 16 quarters.
But unlike De Lorean Motor Co., ADC's aspirations are quite modest. Its goal is to be breaking even by the end of its second fiscal year this month, a delicate balance that, at the least, will require the output and immediate sale of 24 cars a month. ADC's pro formas show annual earnings of $900,000 on sales of 400 cars by 1992 and more than $4.4 million on 1,200 cars annually by 1994 after a proposed expansion, yielding a pretax margin of 18.6% (see "Financials," page 4).
Eventually, ADC intends to remanufacture a car for $12,300 on average, including a core-vehicle acquisition cost of about $4,000 and a direct-labor allotment of some $1,850. As early estimates have proved less realistic, the company has adjusted its expected labor costs. "Twenty minutes into doing our first car," recounts Timothy L. Cline, ADC's one-person middle-management team, "we discovered our initial numbers were wrong." The guinea-pig vehicle ate up 1,000 man-hours of direct labor, a cost of $14,000. To speed up the learning curve and output, four outside subcontractors were hired to rebuild a car each, so ADC could determine how best to proceed. Not one car was completed. "We paid dearly to find out one essential," says Cline, "that we have to have complete control over everything."
