By the middle of this decade, Mike Jackson wants all 200-plus AutoNation stores using the same approach to pricing. His vision: Low everyday prices, limited negotiations and third-party validation for customers.
Pricing remains the great frontier -- and a great profit opportunity -- for retailers, Jackson, CEO of the nation's largest dealership group, told Automotive News. Today, pricing across the AutoNation network of stores and throughout the industry is "somewhat haphazard and capricious," Jackson said.
AutoNation is one of several large public and private dealership groups transitioning to or experimenting with limited-negotiation or value pricing models. Sonic, Asbury and Lithia are in varying stages of transition.
Lithia sets what it considers to be competitive prices up front and discourages negotiations. Sonic has limited the negotiating range on used cars to $500 and is adopting a similar approach next year on new cars.
Experts expect the pricing transformation to snowball.
"In the next five years, the vast majority of the big dealership groups will be using this upfront value pricing strategy," said Jesse Toprak, vice president of industry, trends and insight for TrueCar.com, which tracks pricing.
AutoNation's transition won't happen overnight -- it is a five- to seven-year project, Jackson said. Customers, who have more choices and ever-growing reams of Internet data, are demanding the change.
"They want a quick, easy, convenient process, and they want to get to the bottom line much faster than what the industry has traditionally provided," Jackson said. "So an everyday value price aligns very closely to what the consumer is asking for. I would say the whole company is moving in that direction."
AutoNation is running at least three online pilots this year:
1. Setting a no-haggle price.
2. Making the asking price its opening offer or "pencil" price.
3. Setting an asking price that matches selling prices in that market and is validated by third-party data.
AutoNation executives intend to track pilot results carefully before determining a companywide strategy. COO Michael Maroone previously told Automotive News that will be 2011 or later.
Jackson agreed it's not all figured out today. But his vision seems to line up most closely with the third pilot described. He noted that classic one-price is probably not the answer.
Also, the asking price for any vehicle should be the same online, in advertising and in the store, and compensation policy for salespeople must be changed to support that system, he said.