AutoNation USA, the used-car superstore chain, has started a year-long, $40 million advertising campaign to build its image and pitch a new sales strategy.
The new ad campaign will attempt to saturate the 15 markets in which AutoNation operates 26 stores.
'This is really the first step in evolving the company into the No. 1 national (used-car) brand,' said President Mike Maroone.
By the end of this year, AutoNation intends to expand operations in Southern California to Los Angeles, Long Beach, Rancho Cucamonga and Oxnard. Currently, its only California outlet is in Irvine.
AutoNation's parent company, Republic Industries Inc., is the largest new-car dealership chain in the United States.
John Drury, senior vice president of marketing at AutoNation, said the new advertising campaign will include TV, radio, print, direct mail and in-store merchandising.
'Used cars are known for some of the worst advertising ever,' said Mark Richardson, executive vice president of Hill, Holliday, Connors, Cosmopulous Inc. of Boston, AutoNation's advertising agency.
The production quality of the ad agency's TV commercials rivals automakers' new-car ads.
A little more than one year ago, Maroone said, AutoNation advertised that it had a better way to buy a used car. Now, he says, the new campaign tells why: AutoNation has a simple and easy process for buying a used vehicle.
TV commercials will be used to build AutoNation's image; newspapers and radio will be used for product advertising, promotions and to pitch the used-car superstore's lower prices.
AutoNation's first-tier models remain the same - used vehicles no older than 6 years and with no more than 75,000 miles.
What is new is that after 30 days on the lot, first-tier vehicles will be discounted and sold as Super Saver models, Drury said. Those second-tier vehicles will remain in AutoNation stores for another 30 days before being shipped out for auction.
AutoNation's third-tier models -mainly trade-ins - will be older than 6 years and will have more than 75,000 miles. In short, AutoNation is trying to boost volume by selling cheaper vehicles.
'It makes sense,' said Jim Callahan, quality director at Dohring Co., a market research firm in Glendale, Calif.
A study by Callahan of used-car superstores in the Houston area, where AutoNation has three dealerships, showed that 67.2 percent of the people who shopped a superstore and did not buy said it was due to high prices.
'They know that they're attracting a lot of traffic,' said Callahan, 'but they're not selling a lot of cars.'
The way to remedy the situation, he said, is to tinker with the sales force or tinker with the inventory.
Val Brown, a spokesman for CarMax Group, said AutoNation's new sales strategy is not revolutionary.
He said that the used-car superstore chain, which is based in Richmond, Va., has had price stratification since it opened the first of its 19 stores in 1993.
Meanwhile, the Detroit Auto Dealers Association said it does not feel threatened by the two AutoNation stores in the area, or by their advertising push.
'If that's what they're doing, it's fine,' said Detroit Auto Dealers Association President Russ Shelton. 'They've helped raise awareness of the used-car market locally.'