MARK RECHTIN

AutoNation's revival tour

LOS ANGELES -- The strains of Van Halen's "Right Now" pumps through the packed ballroom of the Cerritos, Calif., Sheraton and 400-plus AutoNation managers and associates are pumped up, too.

As AutoNation CEO Mike Jackson and COO Mike Maroone take the stage to a raucous ovation, the regional road show meeting has more the feeling of a religious revival than an update on corporate operations.

AutoNation has plenty to preach.

The public retail chain just sold its eight millionth vehicle. Its stock price hit an all-time high of $36.22 in April -- although it's been volatile lately. Its adjusted net income of $624 million over the past three years has almost outperformed Lithia, Asbury, Group 1, Sonic Automotive and Penske combined.

And 2011 looks to be trending even better. Each of the AutoNation dealers in attendance on Thursday is given a tribute -- whether it's up $700 in grosses, up 800 basis points in sales efficiency, has reached Toyota's Board of Governors, or is an automaker's most profitable store in the region.

As each dealer receives glorious recognition, the chorus of cheers, vuvuzelas, air horns and New Year's Eve clackers grows in intensity.

The room is sweltering -- Jackson makes a crack about charging extra for air-conditioning -- but no one is looking for the exits.

"If you made it through the last few years, don't think about doing anything else, because we got a great recovery," Jackson says. "A lot of money is going to be made."

AutoNation's three year industry forecast calls for sales of 12.6 million units in 2011, 14.2 million in 2012 and 15.9 million in 2013, and is more optimistic than those from AutoPacific or Edmunds released last week.

Not that the presentation is entirely sunny. Jackson goes on a tirade against stair-step incentives, calling it a hypocritical move by manufacturers allegedly striving to improve customer service.

And he says the "broccoli" of high-mileage vehicles will never be accepted by Americans unless a federal gas tax pushes gas prices into the $5 or $6 a gallon range.

Then it is Maroone's turn. This isn't good-cop, bad-cop, but Maroone does dish out some medicine. He notes that if the AutoNation sales force were just 2 percent more efficient, the company would have sold 56,000 more cars last year.

Maroone also informs his followers that AutoNation has spent $500 million on facility upgrades over the past three years, and is spending $150 million more on marketing - the hidden message being that dealerships can't blame cruddy old buildings and lack of media weight for losing sales to the competition.

AutoNation also has moved its website support entirely to Clickmotive, away from ADP and other providers, which will be more interactive. The brand also is rolling out sales, service and used-vehicle "promises" that include a three-day money-back guarantee on used cars. Maroone tells his charges to "read, understand and deliver" the promises.

On the service side, Maroone wants a 5 percent increase in labor costs paid directly by customers rather than automakers or warranty coverage. In the F&I office, he wants more pre-paid maintenance and service contracts. Overall, there should be a continued improvement in customer service scores.

"We are in the right place, at the right time, with the right team," Maroone says.

A quick Q&A -- with an encouraging number of questions about rewarding employees who stick with the company for more than 20 years -- and the music soars again.

The two Mikes shake a few hands, duck out like a couple of Elvises and head for the airport. They have charged up the troops here, but the road show goes into next week. Atlanta is coming up soon.

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