"It's going to be a value proposition to our customer," AutoNation COO Bill Berman said after the nation's largest new-vehicle retailer announced its wide-ranging strategy Oct. 28. "They'll be able to have the experience of a new-car franchise dealer but at a price point that more closely resembles independent and outside repair facilities."
In new-car dealerships, the rate of defection is high -- typically 67 percent of customers leave after warranty expiration, said Scott Arnold, AutoNation's vice president of customer care operations. AutoNation's defection rate is a little bit better than that industry number, and the aim is to improve it further.
"We're giving the customers options, and we think we will reduce the defection rate," Arnold said.
AutoNation's new strategy has four prongs related to fixed operations.
1.
Used-vehicle service outlets. The company plans to open at least 25 AutoNation USA used-vehicle stores beginning next spring. Each will have a service department with 10 to 20 bays offering both express service, such as oil changes, and scheduled maintenance and repair work. The USA stores will offer a fully digital experience using tablet computers, likely reducing customer check-in time to 5 to 10 minutes, Arnold said.
The USA stores will offer two years of free routine maintenance with a vehicle purchase. That will make for an automatic tie back to the service department to boost retention.
AutoNation will also analyze its customer database to find customers who've left the franchise stores and pitch the USA service offerings to them.
2.
Parts. Both the USA and franchised stores will sell AutoNation Precision Parts for maintenance and repair items. The first such self-branded 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. They are not loss leaders. AutoNation can offer the batteries at a 15 to 20 percent discount vs. an automaker's battery, Berman said, but the retailer will still make money.
CEO Mike Jackson said the company is in negotiation with suppliers for "hundreds of more parts." AutoNation parts will range from wipers and filters up to alternatives to high-cost original equipment such as air conditioning compressors, executives said.
"We think there will be a high adoption rate, just like we saw with [AutoNation-branded] service contracts," Jackson said. And the profit benefit to the company will be immediate, he said.
3.
Accessories. AutoNation 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. The WeatherTech line is just "dipping our toe in," Berman said.
AutoNation ultimately will add much more to its accessory portfolio. The plan is to create a system in the store to encourage accessory add-ons at the time of vehicle purchase by building the step into the digital sales presentation, Berman said.
4.
Collision. AutoNation will expand its collision-center footprint and renovate each of the company's existing 70 centers to a new corporate design. Some will be expanded.
The company also plans to open or acquire at least 18 additional centers over the next two years. It acquired one in Westmont, Ill., in October.
The effort will expand AutoNation's "collision production potential" by 40 percent, Jackson said.
AutoNation is working to broaden the number of insurance companies designating the company a preferred repair provider.
Ten of the company's current locations are already scheduled for renovations beginning early next year, Berman said. The goal is to finish the renovations in about five years.
"Nobody's collision centers look like this," Berman said. "They're going to be beautiful, inviting, customer-friendly."
