AutoNation to strengthen local brand, expand sales on Internet

Phil Levine

Monday, March 27, 2000 | 10:43 a.m.

Michael Maroone wants to end any lingering confusion among Las Vegas car buyers about his company's presence in this market.

To that end, Maroone, the president and chief operating officer of retailing giant AutoNation Inc., said Las Vegans can expect his company's 10 local car dealerships to operate under a new brand name within the next three months.

"There may currently be some confusion (among customers) as to who we are, and who our dealerships are in this market," he said. "We expect this new branding to alleviate any confusion."

He would not disclose the new name, however Maroone said it's company policy to exclude luxury brands from the branding initiative; locally, AutoNation-owned Chaisson BMW in Henderson will be excluded from the branding campaign.

One in five cars currently purchased at Las Vegas auto dealerships is sold by an employee of the Fort Lauderdale-based company.

Although pleased by that market share, Maroone is convinced there's even greater opportunity to expand his company's Las Vegas presence.

"Las Vegas is already one of our top markets in the country," said Maroone, in town recently visiting several AutoNation dealerships.

"We are certainly looking to expand even more in this market. This is a fast-growing city, and we feel there's even more opportunity for us here."

Founded by billionaire H. Wayne Huizenga, AutoNation is in the midst of a significant operational overhaul. Last year, Maroone, along with new Chief Executive Officer Michael J. Jackson, began restructuring the company.

In December, AutoNation closed its 23 used car superstores, including its Henderson superstore; about 1,800 jobs were eliminated nationwide. Prior to those closings, the company laid off 145 workers at its Fort Lauderdale headquarters.

Just last month, AutoNation's ANC Rental Corp. unit announced it would eliminate its call center operations in Minnesota, laying off an additional 200 people.

Maroone said those were difficult but necessary moves to improve operating margins, and allow the company to focus on its core retail efforts.

"There were some brutal decisions we had to make, in terms of right-sizing the corporate structure," he said. "But we've gone through the tough stuff, and are in very good financial shape."

In late January, the company reported a net loss of $403 million after a restructuring charge. Before charges, 1999 fourth quarter earnings from continuing operations were $40.6 million or 10 cents per share, down from $62 million or 13 cents per share a year earlier.

In 1999, AutoNation's total sales exceeded $20 billion. The company employs 30,000 sales associates nationwide.

AutoNation will likely spend this year "digesting its recent acquisitions," said Maroone. However, that slowdown in growth may be short-lived.

"Given the right economic and financial fundamentals, I expect you will find us looking at some aggressive growth plans next year," he said.

The criteria for adding new dealerships has changed since AutoNation began its rapid expansion three years ago, Maroone said.

"We used to have to buy only dealerships that had very strong management teams," he said. "But now, because of our size and capital, we can also look at buying an under-performing company with potential."

Maroone is also a big proponent of e-commerce, and cites the growth of his company's online sales as proof of the burgeoning demand for cars in cyberspace.

"Last year, we sold more than $1 billion in cars online," he said. "That figure should reach about $1.5 billion this year. Our AutoNationDirect.com site is a key part of our growth plans as a company."

The company's experience indicates that Las Vegas is emerging as a very receptive market for online car sales.

Bill Hilbun, the company's regional e-commerce director, estimates that local AutoNation online sales will reach about 2,500 cars this year.

"The sales tend to be more in the nondomestic (model) side," Hilbun said. "We're also finding that a lot of people who are moving here from elsewhere are looking to buy a car online in advance of their arrival.

"They have the option to check for themselves the cars available online. But a lot of people contact our online sales representatives at the various dealerships, and they help them find just the right car."

Training for online car sales differs sharply from that of traditional showroom sales people. Unlike their counterparts in bricks-and-mortar locations, online sales requires a high degree of technical sophistication as well as strong people skills.

Maroone sees the company's growing online business as a complement, rather than a replacement, for in-store sales.

"The customers who tend to go to online sales are those who don't want to go through the traditional in-store buying process," he said. "We are trying to accommodate both types of customers."