As CEO, Mike Jackson has turned AutoNation Inc. on its head in the last 15 months. He has killed the company's signature used-car megastores, sold off a big rent-a-car subsidiary and cut 2,000 jobs.
The dealership segment is out of favor on Wall Street, along with auto suppliers and manufacturers.
"We're painted into the automotive corner with everyone else. We'll never be totally free of it," Jackson said at the Automotive News World Congress.
"Investors should view us not so much in the auto segment but as a specialty retailer," such as Home Depot or Circuit City.
Jackson, 51, joined AutoNation in September 1999, after leaving Mercedes-Benz USA Inc., where he was CEO.
AutoNation's earnings are less cyclical than new-car sales because of back-office businesses such as parts and service, or finance and insurance, Jackson said. "We intend to prove that this year," he said.
In those back-office departments, margins also are higher than on new-car sales, Jackson said.
"If your long-term business strategy depends on your ability to expand new-car margins, I got news for you. As soon as you do, it's just like you're in the supplier business. As soon as you figure out how to make money, knock-knock, the OEM is there at the door, to take it away."
AutoNation's stock hit a 52-week low of $4.62 on Dec. 19, compared with a 52-week high of $10.75 in May. On Jan. 16, AutoNation closed at $6.06, up 25 cents. The stock topped $40 in January 1997.
Third-quarter earnings were off 11.1 percent, to $93.1 million. Nine-month profits fell 62.7 percent to $256.2 million, but the year-ago results included discontinued operations. The company said same-store dealership margins were roughly flat compared with a year ago. Fourth-quarter results are due Feb. 8.
Jackson said AutoNation's stock price should improve if the company can prove itself in the new-car sales downturn that seems to have started in late 2000.
"Everybody knows auto retail is not as cyclical as the manufacturers. We will demonstrate that our strategic plan works well in an economically adverse time," he said. "I believe our stock will move significantly."