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AutoNation's sales odometer clicks over 5-million

By ROBERT TRIGAUX
Published March 1, 2005

[Times photo: Dirk Shadd] AutoNation president Mike Maroone, right, congratulates Herbert May, left, who bought a pickup Monday at AutoWay Chevrolet in Clearwater. AutoNation celebrated the sale as No. 5,000,001.

When Herbert May, 73, walked into AutoWay Chevrolet on Monday to take home his Chevrolet Colorado pickup, he left with some unexpected goodies.

And a number: 5-million and one.

AutoNation - the owner of Tampa Bay's 15 AutoWay dealerships, the largest public corporation headquartered in Florida, and the nation's biggest seller of new and used vehicles - chose May to help celebrate a milestone in auto sales.

Never before has one business of auto dealerships sold 5-million new and used vehicles.

Oh, yes, and AutoNation achieved that remarkable figure in just eight years.

"This shows our corporate strategy has been validated," says Mike Maroone, the AutoNation president who was in Clearwater for the event.

And what is that strategy?

AutoNation, based in Fort Lauderdale, was the brainchild in the mid 1990s of South Florida entrepreneur Wayne Huizenga. His original, near-heretical plan was to create used-car superstores nationwide, selling a range of vehicle brands in one place under the AutoNation name. The company later shifted its focus to new cars.

The company went public, a gutsy move at the time in auto retailing. It rapidly purchased dealerships across Florida and other Sun Belt states. It offered no-haggle pricing and cut overhead costs as it grew. And it aggressively promoted itself under regional brand names as a service-oriented business, often with sports stars as spokesmen.

In the Tampa Bay market, for example, AutoNation operates under the AutoWay brand name. It uses popular Miami Dolphins Hall of Famer Dan Marino as its spokesman in Florida and several other southeastern markets. In Denver, former Broncos quarterback John Elway markets AutoNation vehicles under the John Elway brand. He also is the spokesman for AutoNation in its newest market, Phoenix, where the company will operate under the Power brand name. And in Texas, where AutoNation uses the Bankston brand, Houston Astros pitcher Roger Clemens is the company's latest sports spokesman.

Using regional brands - AutoNation uses AutoWay and three other names in Florida, and 14 different brand names in all across its U.S. markets - was not the original plan. As its name suggests, AutoNation initially wanted to establish a national brand name for selling vehicles, in the same way McDonald's and Home Depot leverage their names.

But the AutoNation national brand was scrapped after major auto manufacturers balked at what they saw as too much power consolidating in one auto retailer's hands. AutoNation compromised by creating regional brands.

The business model, accompanied by a few bumps now and then, has worked well. AutoNation is the country's largest auto retailer with more than 385 new-vehicle franchises at 281 locations in 17 mostly high-growth states. The company had sales of $19.4-billion last year, making it No. 1 in revenues among public companies in Florida, just ahead of No. 2 Tech Data Corp. in Clearwater.

AutoNation's stock price has been on the rise since last summer, going from a low of about $15 to close Monday at $19.53 per share. That's still down from the heydays of the late '90s when the stock briefly topped $40, but a marked improvement from 2000 when shares traded for less than $7.

The company's market value now tops $5-billion, which, for an industry still heavily populated with privately held, family-run dealerships, gives AutoNation plenty of clout and buying power.

Maroone, in an interview, was quick to point out Fortune magazine's March 7 cover story of "America's Most Admired Public Companies," which asked companies in 65 industries to rank their peers. For the fourth consecutive year, AutoNation was tops in auto retailing.

Is AutoNation big and getting bigger? Absolutely, though it now focuses more on earnings than sheer size. With nearly $20-billion in annual sales, the company is twice the size in revenues of the nation's No. 2 auto retailer, United Auto Group in Bloomfield Hills, Mich. United Auto's Tony Pordon says his company has managed to sell 1.3-million new and used vehicles since 1999. That includes the sales of both 152 U.S. and 101 overseas franchises.

Maroone laughs at the behemoth image. More than 90 percent of the auto-retailing industry continues to be hometown, private dealerships, he says. AutoNation may be No. 1 in the business, but it's a big business. Auto retailers will sell close to 17-million vehicles this year. AutoNation has less than a 3 percent share of the market, he says.

"Our competition is the hometown dealer across the street from our stores," Maroone says.

The AutoNation president started his day in the South Florida town of Pembroke Pines, where the company decided to celebrate sale No. 5-million at one of its Chevrolet dealerships.

How did the company know that specific sales number would be hit on Monday? Because it's big enough that its tracking system can anticipate sales volume days ahead.

And how did the company know No. 5-million would be reached in Pembroke Pines, and No. 5-million-and-one take place across the state in Clearwater? Well, let's just say a sales accounting system will never get in the way of a good, old-fashioned promotional opportunity.

At the AutoWay Chevrolet dealership, sale No. 5,000,001 was met with balloons, streamers, applause, cake, free upgrades to a pickup truck, and free maintenance for the life of the vehicle. The surprised buyer, Herbert May, who works in security at Regency Oaks in Clearwater, took all the hoopla in stride.

"I've been a pickup driver all my life," May says. Now he's probably a loyal AutoNation customer for life, too.

--Robert Trigaux can be reached at trigaux@sptimes.com or 727 893-8405.

[Last modified March 1, 2005, 08:15:23]