Jackson told Automotive News that the first phase of AutoNation USA and other brand extensions costs $500 million, but over the last year and a half, the Fort Lauderdale, Fla., dealership group had asset sales of $250 million. Over the next year and a half, it will have another $250 million in asset sales.
"The entire $500 million will be a redeployment of capital generated from asset sales," Jackson said.
The nation's largest new-vehicle retailer also owns $3 billion of appreciating real estate that Jackson said it can sell "for something other than a car dealership," and it will sell underperforming assets to fund the $500 million.
With the launch of AutoNation USA, the retailer is targeting used-vehicle sales growth as new-car margins tighten. It also helps handle the flood of lease returns, Jackson said.
AutoNation's fourth-quarter new-vehicle retail sales eased 1.3 percent from the year-earlier quarter to 84,622 units, and gross profit per new vehicle retailed slipped 4 percent to $1,957.
On a same-store basis, the dealership group's new-vehicle sales fell 4.3 percent to 78,907, vs. a 0.3 percent industrywide gain in the quarter.
Meanwhile, used-vehicle retail sales rose 2.4 percent to 55,213, and inched up 0.2 percent on a same-store basis. Gross profit per used vehicle retailed slumped 12 percent to $1,264.
Also on a same-store basis, gross profit fell in every business category except parts and service, where it rose 1.7 percent to $331.6 million. The sharpest drop came in used vehicles, combining retail and wholesale, where gross profit dropped 15 percent to $62.5 million.
Jackson said there is a "hangover from holding almost 20 percent of our inventory" under the dealership group's previous policy that blocked it from selling any vehicle with an open recall.
Some of the used inventory "aged out" before AutoNation reversed the policy in November. Through the end of the year, front-end profit on used will recover, Jackson said.
Separately, Group 1 Automotive Inc. of Houston swung to a net profit of $30.8 million in the fourth quarter from a year-earlier loss, as new vehicle sales decreased but gross profit per unit grew.
"The progress we delivered on both our cost structure during the fourth quarter and the reduction of our U.S. inventory, which ended the quarter with a 65-day supply, has us well positioned as we enter 2017," CEO Earl Hesterberg said.
Laurence Iliff contributed to this report.