AutoNation Inc., once known for its aggressive acquisitions, is no longer on a shopping spree.
The real estate department and the mergers and acquisitions department took a beating in corporate layoffs that began just over a week ago, and acquisitions have slowed this year.
AutoNation, the nation's largest dealership group, fired 30 percent of the employees who work at its Fort Lauderdale, Fla., headquarters.
'We want to be the low-cost provider,' said Mike Maroone, president of the auto retail group. 'Our focus is not M&A. It is really two things: integrating the (used-vehicle) megastores and filling out the markets we are already in.'
The company declined to say what percent of the mergers and acquisitions department was cut.
AutoNation added $7 billion in revenues through acquisitions last year. The chain has signed deals so far this year to add only $5 billion in revenues.
Just four months ago, AutoNation said it had acquisitions in the pipeline that would add $10 billion to its revenues. The chain said it still plans to buy those stores, but not in 2000.
'The pace will be slower,' said AutoNation spokesman Oscar Suris.
The company's focus is now on cutting costs. Though net income is up, the stock price was at a 52-week low of just under $10 per share late last week. Wall Street is waiting to see if it can operate dealerships efficiently as it converts its chain to no-haggle pricing.
In Denver, where AutoNation launched the no-haggle sales strategy, profit margins suffered substantially in the first few months of the campaign because of the company's aggressive introductory pricing.
But AutoNation has cut expenses and raised new-vehicle prices, pushing net profit margins in Denver from 1 percent in the first few months of the year to 3 percent for the month of September, said Maroone. As of last week, the company handed pink slips to 195 of the 650 employees who work at its headquarters. Though the company is shedding its car rental business, the layoffs are not exclusively related to the spin-off. Every department was hit, and some were almost cut in half. AutoNation's general managers applaud the layoffs and the emphasis on a leaner, less top-heavy organization.
Said one dealership general manager, who asked not to be named: 'This company is made up of 400 dealerships that functioned pretty damn well before the 650 (employees at headquarters) took them over.'