By launching a network of used-car stores under the AutoNation USA name, the country's largest new-vehicle retailer is coming full circle. But AutoNation Inc. CEO Mike Jackson, who pulled the plug on the company's last used-car chain, says the opportunity is ripe and the company has the right strategy this time.
"We're in a different place in a different time," said Jackson, who closed most of the company's 29 used-car megastores and converted the rest to new-car dealerships shortly after becoming CEO in 1999.
Last week, he revived the AutoNation USA name for a series of used-car stores that will be the showpiece in a wide-ranging $500 million-plus brand extension strategy that includes AutoNation-branded collision centers, wholesale auctions, parts and accessories.
What's different? Today, AutoNation has a well-recognized brand name, transactional websites, a digital sales platform and the ability to centrally price vehicles, appraise trade-ins and distribute vehicle inventory. In 1999, the company was in chaos, and the AutoNation USA used-vehicle megastores were too big, incompatible with the franchised business and "unsalvageable," Jackson said.
"It was a deliberate position to be patient, to build a brand, build the digital capability, validate the brand and then take the step," Jackson said.
The new AutoNation USA stores will compete against market giant CarMax Inc. and used-only stores from other new-car retailers such as Sonic Automotive Inc.'s EchoPark and Asbury Automotive Group Inc.'s Q auto.
AutoNation USA begins operating next spring in Houston. Five stores are planned for 2017 with another 20 in development. The size and scope of the new stores are much different from the old AutoNation USA stores. These will occupy 5 to 7 acres vs. the 20- to 25-acre sites of the old megastores.