AutoNation adds used-only stores as part of broad expansion
Branded collision centers, parts, auctions coming
FORT LAUDERDALE, Fla. -- AutoNation Inc. is embarking on a wide-ranging, $500 million brand extension strategy led by the launch of stand-alone used-vehicle stores.
The retailer’s AutoNation USA used-vehicle stores will begin operating next spring, with the first store planned for Houston. AutoNation plans to open five stores in 2017. Another 20 stores are in development, AutoNation CEO Mike Jackson said. Up to 100 stores are feasible for the retailer’s current footprint.
In addition, AutoNation will move to no-haggle pricing for all used vehicles, both those sold at AutoNation USA stores and at the retailer’s traditional 270 franchised dealerships.
The dealership group, the nation’s largest new-car retailer, also will:
- Add collision centers and renovate existing ones, unifying them under the AutoNation brand.
- Launch a line of AutoNation-branded maintenance and repair parts.
- Sell AutoNation-branded vehicle accessories at its dealerships.
- Expand its auction business to five locations within the next two years from one today.
“Two drivers that give us the confidence to take this bold step is that the establishment of the brand has gone extremely well since we launched it in 2013,” Jackson said. “Acceptance from the customers has been extraordinary.”
In 2013, AutoNation replaced its regional brand names with the AutoNation name at its non-luxury-brand stores. Today, eight of 10 people in markets where AutoNation has stores are aware of the brand, the company said.
In late 2014, the company launched AutoNation Express, which created what the company calls its digital storefront with transactional websites for its dealerships. The deal can’t be completed entirely online, but a customer can select a vehicle, determine a price, hold it with a deposit and set up a trade-in. In 2015, the retailer introduced self-branded service contracts and other finance and insurance products.
“So we have this one-two capability of the brand and of digital, so now we’re ready to see how we can extend this brand we created to new business opportunities,” Jackson said.
Here’s a snapshot of what AutoNation is planning.
The untapped potential on the used-car side is huge, Jackson told Automotive News.
“It’s a 40 million [units] a year marketplace,” he said. “The consumer is still dying for a better experience in preowned.”
A single employee will handle the transaction from start to finish using tablet computers.
AutoNation USA stores will use AutoNation Express as their in-store operating platform. All vehicles will be priced to market conditions with no price negotiations during the transaction. Once a shopper has selected a vehicle, the transaction is expected to be completed in an hour or less. The stores will offer a range of brands and price points customized to the local market. Two years of free routine maintenance will be included with a vehicle purchase.
After the initial store in Houston, AutoNation will open the next USA store in Corpus Christi, Texas, by the end of June. Phoenix and Las Vegas are the other markets slated to get stores in 2017, with Las Vegas expected to get two stores.
Size will vary a bit, but stores generally are expected to sit on 5- to 7-acre lots with building square footage in the 30,000 to 35,000 range. AutoNation USA stores will carry 250 to 300 cars in stock and will employ around 60 employees including technicians, AutoNation COO Bill Berman said.
Each will have a service department with 10 to 20 bays offering both express service and scheduled maintenance and repair work. The aim is to improve retention of customers with out-of-warranty vehicles who traditionally go to independent shops.
Because both the stand-alone used stores and the franchised new-vehicle stores will use the AutoNation name, the company has to make changes at the franchised stores to align the operating strategies. “They can’t be at odds,” Jackson said.
So the franchised dealerships also are moving to a one-price system for used cars, including luxury and certified preowned vehicles. During the third quarter, AutoNation implemented one-price on used vehicles at its franchised stores in its Las Vegas, Phoenix and Denver markets and at its Texas stores in Corpus Christi, Amarillo, Austin, Tyler and Waco. During the fourth quarter, the effort moves on to Dallas, Seattle and California.
By the end of June 2017, all the franchised stores will be using the one-price system for used, Berman said. New pay plans offering a base wage plus bonuses for volume, customer satisfaction and other criteria are being implemented. New hires will go on the new structure, and existing employees are able to choose the new plan or their existing plan.
Inventory will be appraised and priced by a centralized department, which also will decide how to distribute the company’s used inventory among the stores.
At both the used and franchised stores, AutoNation is introducing the AutoNation Precision Parts brand for maintenance and repair items. The first offering -- AutoNation batteries, made by Exide -- went on sale at dealerships in September at three price points. The top-level battery offers a lifetime replacement guarantee.
Berman said AutoNation can offer the batteries at a 15 to 20 percent discount vs. an automaker’s battery line. Wipers and other items are coming.
The retailer also began selling aftermarket accessories such as floor mats in October. They are branded AutoNation Auto Gear presented by WeatherTech. WeatherTech is a well-known supplier of accessories. AutoNation’s accessory portfolio will be expanded in coming months.
AutoNation is expanding and renovating its collision-center footprint. Each of the company’s 69 centers will be renovated to a new corporate design. Some will be expanded.
“Nobody’s collision centers look like this,” Berman said. “They’re going to be beautiful, inviting, customer-friendly.”
The company also plans to open or acquire at least 18 new collision centers over the next two years. It announced today that it will acquire a center in Westmont, Ill., for its 70th location.
AutoNation will get into the auction business in a much bigger way with plans to open four AutoNation-branded auto auctions over the next two years. It will start with new locations in Orlando and Houston in the first quarter of 2017 and another in Atlanta in the second half of the year.
They will join an existing auction that AutoNation has owned and operated for more than 18 years in Los Angeles. That auction currently sells about 25,000 vehicles annually under the Prime Auto Auction name. It is being rebranded to the AutoNation name this month.
AutoNation expects to sell more than 20,000 vehicles annually at each of its auction locations.
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