The merger announced last year between Garff Enterprises and Rick Warner Auto Group has been called off, killing a deal that would have created Utah's largest chain of automobile dealerships.
"There have been some difficulties. It's been a lot harder to pull together than we anticipated," said Robert H. Garff, chief executive of Garff Enterprises."Maybe one day we'll get together, but because of complications we've decided to keep going our separate ways."
But the two organizations, which between them control an estimated 15 percent of the local auto market, will continue with their current joint ventures, said Garff, which include the Garff/Warner Body Shop at 900 South and Main, and their recent joint purchase of Steve Clifford Motors in Provo, which will be renamed Garff Porsche-Audi.
Garff said the two companies also intend to seek other joint ventures when they arise and seem appropriate.
Garff and his family are sole owners of Garff Enterprises while Novell founder Ray Noorda owns about 95 percent of Rick Warner. Noorda bought most of the Rick Warner dealerships several years ago, but not the Warner Super Ford Store or Warner Truckland, which are owned by Bart Warner, Rick Warner's son.
When the merger was announced last April, Garff said it was a move to help both companies better compete in a changing marketplace. It also was seen as a continuation of the trend from small, family owned dealerships to mega-dealers.
Garff said canceling the merger won't slow that trend, noting that the failed merger between Garff and Warner is just a "hiccup" in the move toward fewer, larger dealers.
"The consolidation in the auto sales industry will continue just as it will with banks, health care and retail stores," said Garff.
If anything, he said, car dealers have been slow to react to merger mania, but they are now making up for lost time. The National Automobile Dealers Association predicts that the 22,000 dealers in America today will be slashed to only 5,000 over the next five years.
"The fact is," said Garff, "it's hard to compete in an environment where the big get bigger. They gain market penetration and save synergistic expenses like advertising and flooring (interest paid on inventory) costs. It will drive more and more dealers together."
That doesn't mean there won't always be a few "ma and pa" dealers, he said, but many long-time family franchises are looking for "exit strategies" as their owners reach retirement age. Being acquired by a mega-dealer is one such strategy.
"It's getting harder to pass these businesses down from father to son," said Garff. "Just think of all the well-known dealer names that have disappeared here, names like Streator and Wagstaff among others. That will continue to happen."
The car business also is changing in ways beyond consolidation of dealerships. Buying and selling cars on the World Wide Web has been growing exponentially.