Elk Grove’s Alex Marinov is no less audacious now than he was 10 years ago when he launched a freight-brokerage business at age 18 in a spare bedroom of his parents’ home.
Like his business, though, Marinov has matured and grown in unexpected ways. His company, RCG Logistics, specializes in shipping vehicles all around the country for auto dealers, finance companies, auction houses and scrap yards.
Marinov wasn’t so sure his endeavor would work out in the long term, so he got a degree in civil engineering from Sacramento State in 2009. When he looked for a job in that industry amid a construction industry downturn, he found that he was competing with veterans for entry-level jobs.
He focused all his energy on building business for RCG Logistics, and despite a broad economic malaise, his company grew. In 2013, four years after his college graduation, he and four employees moved out of his parents’ home and into roughly 700 square feet of space in an office park in Elk Grove.
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Today, Marinov has six employees and soon will move his business into 1,000 square feet in an office building in Sacramento’s Pocket neighborhood because he has plans to hire more people. Revenue has grown by about 20 percent a year since 2013.
Every day, Marinov told me, auto finance companies, dealers, salvage yards and auction houses move thousands of used vehicles around the country. RCG Logistics works with them to do it, finding available trucking companies and contracting with them to make delivery.
“Essentially, when you lease a Toyota, a Lexus or a BMW and you return it ... nine times out of 10, it will go to an auction yard because auctions are super-efficient at selling cars quickly and fairly,” Marinov said. “Yesterday, I was talking to a finance company moving cars from Alabama to Virginia because that market is oversaturated with a certain type of car and they can get a much better return in a different market. By shipping it several hundred miles, they can easily cover the transportation costs on the sales and still make a profit.”
In order to attract business from the high-profile finance companies, Marinov said, he realized he could no longer rely on the trucking companies’ insurance. RCG would have to increase the limits on its own policies, Marinov said. He did that and went one step further.
Trucking companies in the car-hauling business often required auto dealers to pay cash upon delivery of the vehicles. It was not unusual, Marinov said, for a dealer to buy 50 to 70 cars at one auction, and they would end up taking delivery early in the morning or late in the evening.
It wasn’t convenient to make a bank run, nor was it safe to hold so much cash on the premises all day, Marinov said. So, he made arrangements for RCG Logistics to pay the shipping costs, guaranteeing payment within two to five days of delivery. Roughly 60 percent to 70 percent of the company’s business now comes from auctions.
Typically, Marinov said, his staff will know as much about the weather forecasts in Texas as it does about those for the Sacramento region because some of RCG’s biggest traffic volume occurs between dealers and auctions in Dallas, Houston and San Antonio.
“A dealer needs to fill his inventory. If the Subaru Outback is selling well, he’s going to go to Dallas and buy Subaru Outbacks,” Marinov said, “or if pickup trucks are selling, he’s going to look outside his area. Dealers go through a lot of cars. ... If I’m selling my own car, I can sit on it for three weeks, four weeks, until I get the price I want. Dealers don’t work that way.”
Marinov also trained himself in Web programming to improve his website, www.rcgauto.com, and created a pricing engine that could weigh thousands of variables and provide instant quotes. The system was so good that individual consumers, especially snowbirds on the East Coast, started using it.
“People on the East Coast move to Florida for the winter,” Marinov said. “They call it the snowbird migration from Canada, New Jersey, New York. What happens is there are thousands of cars that need to be moved in a month or a month and a half, really. Everybody wants to move to Florida in October and they want to bring their cars back in May.”
This direct-to-consumer market helped to diversify RCG Logistics’ revenue stream, but auto auctions remain the bread-and-butter business. Consequently, Marinov said, he joined industry associations and attends national conventions to woo new clients. It helps, he said, that he’s been reading Car and Driver since he was a teenager and that all his employees are also gear heads.