When AutoNation Inc. fully rolls out its so-called digital storefront, the following scenario may not be all that far-fetched:
A shopper at home in pajamas searching AutoNation’s Web site at midnight finds the car he or she wants. Within minutes, an online deposit is made, and the vehicle is reserved and removed from the retailer’s available inventory. A price is determined for the shopper’s trade-in, and preliminary financing terms are set, which include an AutoNation-branded extended service contract.
The next day, mostly completed paperwork and the new car await that shopper at one of the retailer’s 229 dealerships.
That’s the vision AutoNation CEO Mike Jackson hinted at Thursday when he said the nation’s largest dealership group would move away from third-party lead providers to focus on its own online initiatives.
In addition to its new-car dealings, AutoNation aims to build new online capabilities in used cars, service, parts and finance and insurance, Jackson said.
“We’re really looking at the whole spectrum of how we interact with our customers,” Jackson told analysts after announcing higher first-quarter profits. “We’re also going to be looking to broaden the brand attributes of AutoNation and move into different business fields with branded products from AutoNation, whether that’s service contracts, warranty contracts. We’re full of ideas.”
Though the pullback from third-party providers is prompted in part by rising costs, AutoNation executives say it’s not a cost-cutting move. The savings will be used to build new digital capabilities, invest in technologies to link the store and online experiences and increase brand advertising to drive traffic to AutoNation’s Web sites, COO Mike Maroone told Automotive News.
AutoNation plans to spend upward of $100 million during the next several years to build its digital storefront and establish its brand. Other details of the rollout are thin. The digital storefront is expected to launch in late December, but that version won’t include all the features the company is developing.
Some features that Jackson hinted at — say, private-label F&I products such as service contracts — are expected after the launch, industry sources say. But AutoNation isn’t expected to drop its offerings provided by captive lenders and other F&I vendors.
AutoNation launched the digital project in 2012. In 2013, the retailer branded all its stores with the AutoNation name and launched a brand marketing campaign. Digital traffic is up 20 percent in the last year, and AutoNation’s sites now generate more sales than all third-party relationships combined, Jackson said.
“The customer wants one experience with the retailer that’s seamless between their interactions with digital and brick-and-mortar,” Jackson said. “We are in a unique position to do that in that we have the scale, we’ve successfully launched the brand, and we have the footprint of stores to pursue that.”