Tweak in the sales process pays off for AutoNation

Donna Harris covers automotive retailing for Automotive News
We've recently written about dealers taking the no-haggle approach to new-vehicle sales. It's part of a general movement toward more market-based pricing.

AutoNation Inc., the nation's largest auto retailer, hasn't dropped haggling completely, but it's tweaked the process to reduce price negotiations. For example, when AutoNation dealerships appraise a trade-in, they don't just tell the customer what they think the vehicle's wholesale value is. They also provide a realistic estimate of its retail value.

Coaching the customer like this can help AutoNation preserve its profit on the new-car sale and on the trade-in later when it's retailed.

“It's really reduced the bandwidth of negotiation,” President Mike Maroone recently told analysts. “It's not a one-price strategy, but it's a market-price strategy. And it's certainly closer to a nonnegotiable strategy than what we've been in the past.”

AutoNation believes its transparency pays off.