It was like taking candy from a baby. American car buyers were sick and tired of traditional used-car dealers, who were unresponsive, uncaring, greedy bumpkins. Bring in some big-time, highly capitalized consolidators who knew what the consumers wanted. The outsiders would show the stodgy, slow, in-bred, outmoded auto industry how to do things right - and make a lot of money doing it.
Billionaire H. Wayne Huizenga and his team made a serious business mistake: They underestimated the difficulty of retailing automobiles, and they underestimated the traditional American car dealer, who was more resilient, competitive and flexible than many outsiders thought.
The proof came last week when AutoNation CEO Mike Jackson closed 23 AutoNation used-car superstores and folded the rest into new-car franchises, ending a costly experiment. Big-box superstores consume capital and incur a huge cost floorplanning all those vehicles they keep in stock. As a result, AutoNation superstores were unable to move the merchandise fast enough because neighboring dealers could beat them on price.
Give credit to Jackson and Mike Maroone, a couple of savvy car guys, who saw what had to be done at AutoNation and did it. Huizenga and Steve Berrard, a couple of enterprising outsiders, had a vision that didn't work. But they were not completely wrong.
Some of their concepts will endure. These include one-price selling, improved customer handling, Internet selling and strong dealership branding. Clever dealers already have adopted them.
There are a couple of big-box used-car superstores left, including CarMax, but they must reassess their own future now that the most visible and recognizable competitor has withdrawn and Wall Street seems to have lost all confidence in the concept. There is a very good reason that the retail auto industry operates just about the same way it has for 75 years: It works.
Outsiders with big ideas must remember that. And smart dealers won't waste time gloating.