Mike Maroone was one of the first dealers to sell his dealerships to AutoNation. Now, as the world's largest dealer group refocuses its efforts on retail car sales, he says the AutoNation model is still solid.
Staff Reporter Donna Harris talked to Maroone in a telephone interview Tuesday, Aug. 3, the day after he was named president of AutoNation. An edited transcript follows.
Why spin off the rental car companies? Weren't the rental companies supplying you with a steady source of late-model used vehicles?
We found that our new-vehicle franchised dealerships have been able to generate a supply of used vehicles to meet their needs and our superstores' needs. There is less need (for rental returns) as the mix is now 9-to-1 franchises to megastores.
Also there is a significant overcapacity in the industry, and manufacturers are still incentivizing rental companies. The rental cars are not as representative of buyer demand as our internal supply from franchised dealerships. We will still have a working relationship with the rental companies, supplying them with cars and providing parts and service.
John Costello came from Sears with plenty of marketing expertise. Did he have a hand in your brand marketing strategy and, if so, how will the strategy change now that he has left?
John brought a lot to the table. He is extremely knowledgeable. Some of the things John started - the NFL Super Bowl sponsorship is one example and some of the Internet marketing alliances - helped set our direction (for the AutoNation brand). He was involved in creating the Auto Rewards program (rewarding repeat customers). He wanted to create a consistent customer experience across the enterprise. That will all continue.
You were not originally a proponent of one-price selling. Will that part of the strategy continue with you at the helm?
Very few dealers have tried one-price selling. I was very skeptical, but the results we have had in Denver are spectacular. We are starting to roll out most elements of our Denver test at our 412 franchises - with the exception of one-price selling. There are two other metro areas in which we will continue to test one-price selling. We have decided on the markets but aren't ready to announce them.
We'll start the tests at the end of the fourth quarter. We're trying to validate the financial models (for one-price selling). We are still focused on one-price selling, but we want to roll it out in an orderly and intelligent manner. We want the right formula. We are trying to come up with best practices.
Would you allow some haggling - say, throwing in floor mats or wiggling on the trade-in value?
We would prefer a pure model, but because of the different ways of valuing trade-ins, we allow a second opinion in Denver. We don't want anything to create an impression that we are negotiating. But we will take a second look at the trade-in to validate our numbers.
The second opinion can come from the same store from a different appraiser. If (a second AutoNation appraiser) thinks the trade-in is worth more, we enter that in the computer database (shared by all the local AutoNation stores).
The customers know exactly what they are getting for the trade-in. It is good at any store in our network.