Four years ago, AutoNation Inc. made headlines as it swept across the nation building an automobile retail empire with annual sales now topping $20 billion.
The Fort Lauderdale, Fla.-based company quickly became not only the nation’s largest network of dealerships but also Orange County’s top operator, with $1.1 billion in annual sales from its 16 local franchises. They include House of Imports in Buena Park, Toyota of Cerritos and Irvine Toyota.
But it hasn’t been a smooth ride. AutoNation, headed by dealmaker H. Wayne Huizenga, has shifted gears in OC, and elsewhere. AutoNation abandoned its original plan to build a national chain of no-haggle used-car superstores in December when sales didn’t measure up. As a result, the company closed all 37 AutoNation used-car stores, including its Irvine superstore, and called off plans to develop others, including a second OC store in Anaheim Hills.
Now the company is focusing on its more profitable new-car dealerships, which total 49 franchises in Southern California and 400 nationwide.
The company’s local plans include developing a single brand name for its Southern California retail chain, drumming up more Internet sales leads at AutoNation.com and selling its AutoNation USA superstore property in Irvine. In what could be a model for AutoNation’s local strategy, in July the company’s South Florida operations adopted the Maroone name for its 30 dealerships.
For Southern California, Maron and Davis Advertising in Encino was hired earlier this year to handle regional advertising. The firm also is charged with developing a new name, a unified logo and store signs. The region is one of 10 AutoNation districts nationwide.
“Southern California is such a competitive market that our advertising spending is higher than Florida, where it’s not as fierce,” said Ray Beshoff, district vice president of AutoNation Southern California.
Beshoff, who works out of Buena Park and oversees OC, was general manager of House of Imports when AutoNation bought the dealership in 1998.
Jerry Heuer, senior district vice president of AutoNation for all of Southern California, heads up the regional operations in Los Angeles.
“We are trying to get all dealers to look as similar as possible,” Beshoff said, adding that he expects to launch his district’s new local brand name before the end of the year.
AutoNation expects to nearly double its total Internet sales of new cars and trucks this year to $1.7 billion by dedicating a single e-commerce salesperson at dealerships. It also has a joint partnership with America Online Inc. The parent company’s Internet business rang up 46,000 vehicle sales last year, worth $1 billion. Officials project to sell another 20,000 vehicles this year online.
AutoNation and America Online jointly launched a new site in July called AOL AutosDirect, which operates independently from AutoNationDirect.com. The alliance offers consumers exclusive benefits, such as one-year free scheduled service, AOL concierge searches to find the best price and to locate cars, $200 off any vehicle ordered from the factory, $100 off the purchase of a theft deterrent device and guaranteed service appointments for online reservations.
Jim Hossack, an analyst with Santa Ana-based market researcher Auto Pacific Inc., said he believes the Internet will play a bigger role in auto purchases. While online sales are just a fraction of the industry’s total, he said, he sees that gradually changing.
“A lot more people are using the Internet to search for information, products, pricing and availability, although it’s rare to purchase over the Internet,” he said. “People are seeking information and there has already been a radical change over the last few years.”
Dealers will move away from investing in fancy facilities to beefing up their personnel training and upgrading technology to support Internet sales, Hossack said.
Meanwhile, AutoNation’s dealerships are holding their own in OC. For the five months ended May 31, nearly all of AutoNation’s OC franchises reported double-digit sales gains vs. the same period a year ago. The exception: Irvine Nissan, which was down 15.4% to $24 million.
“We have a lot of dealerships that have improved because they have adopted our way of managing dealerships,” Beshoff said.
AutoNation’s largest OC dealerships are House of Imports with sales up 13.2% to $112.9 million for the first five months, followed by Toyota of Cerritos with sales up 3.4% to $68.6 million, and Irvine Toyota, up 9.3% to $44 million. n
