Auto Nation Inc Company Analysis Marketing Essay

AutoNation, Inc. , America ‘s “ largest Automotive Retailer ” , was founded in April 1999 and is presently headquartered in Ft. Lauderdale, Florida. Their motto, AutoNation: Driven to be the Best, supports its vision of holding a “ foundation of operation excellence that drives an sturdy focal point on the client ” . AutoNation strives to be the best tally and most profitable automotive retail merchant by using 17,000 people at 205 franchise locations. AutoNation is the lone car retail merchant to sell over 7 million vehicles. ( Company profile, 2006 )

Brand Names. One facet that has made AutoNation so successful is their trade name names. AutoNation has created 15 trade name names in correlativity to 14 of its franchises. These trade name names give AutoNation a competitory advantage over other franchises because clients recognize their trade names. With the trade name name comes the confidence that the merchandise you are having is of high quality for a great trade. ( Eldridge, 2004 )

Business Divisions. In order to serve the client better, AutoNation separates the types of vehicles for sale into three classs: Import, Domestic, and Premium Luxury. The import division is comprised of new vehicles manufactured by Toyota, Honda, and Nissan. The domestic division consists of autos from makers such as GM, Ford, and Chrysler. The premium luxury division sells new vehicles manufactured by Mercedes, BMW, and Lexus ( Datamonitor, 2009, p.5-7 ; 23 ) .

Along with offering a assortment of autos, AutoNation besides offers other services such as automotive and parts service ; automotive finance and insurance merchandises ; vehicle care, fix, pigment ; and hit services. AutoNation besides “ arranges finance for vehicle purchases through third-party finance beginnings ” ( Datamonitor, 2009, p.5-7 ; 23 ) . AutoNation has besides begun to spread out its concern to new markets and cliental utilizing the cyberspace, conveying in even more concern than old old ages. The AutoNation Retail Group “ manages the operation of about 270 Web sites for the company ‘s franchised automotive franchises ” ( St. James Press, 2003 ) .

Historical Overview

H. Wayne Huizenga, laminitis of Waste Management and Blockbuster Video, invested in a waste direction company out of Atlanta in 1996. From there Huizenga hoped to construct an industry with involvements in rubbish aggregation, security, and used-car superstores. From there the company became Republic Industries geting vehicle franchises, waste direction and vehicle rental companies. On April 6, 1999, Republic Industries became the now popular known AutoNation, Inc. ( Datamonitor, 2009, p.5-7 ; 23. ) In September 1999, Mike Jackson became the new CEO of AutoNation, trusting to assist convey the fighting new company into the head of the automotive industry. Before Mike Jackson could take the AutoNation place he had to give up being the Chief executive officer of Mercedes-Benz USA ( Hoover, 2010 ) . It was non an easy start for the CEO, holding to do occupation cuts, shuting franchises, and taking a new bend on AutoNation- traveling from largely used-car gross revenues to new-car gross revenues. After the name alteration and corporate alteration, AutoNation was split into two major groups: the AutoNation Retail Group and AutoNation Rental Group. The Rental Group so acquired three big leagues rental brands-National Car Rental Systems, Alamo Rent-A-Car Inc. , and Car Temps USA. ( St. James Press, 2003 )

SWOT Analysis


AutoNation is a company with strength in many countries. This first strength we will discourse is the diverseness of revenue/income. Our company has the advantage of gross being split between three different beginnings. The three different divisions include: Imports, Premium Luxury Division, and Domestic. ( DATAMONITOR ) The taking beginning of gross is the Imports Division. The Imports Division accounted for 38.9 % of AutoNation gross in 2008. The 2nd highest beginning of gross for AutoNation is the domestic division, which accounted for 35.1 % of AutoNation gross in 2008. ( DATAMONITOR ) The least sum of gross of the three divisions is the Premium Luxury Division. Even though it is the least sum of gross of the three, it still accounted for 26 % of the gross, which is a really important cut of the income. What is proved with all of this information is that AutoNation does non trust on one division merely, but instead three about even divisions. This is a strength because if one of these divisions were to neglect, it would non be as large of a desolation as losing all gross would be.

On-line Program. AutoNation Direct Online is now ( as of November 30, 2009 ) in more than 100 AutoNation locations in Florida, California, and Colorado. ( Stein ) The plan is designed for the client to turn up and buy the auto via cyberspace on, and so the auto is delivered to either the client ‘s place or a auto franchise near their place. AutoNation Direct Online is projected to sell around 2,500 units online this twelvemonth ( Stein ) , which is dual what was sold last twelvemonth via cyberspace. Another interesting facet of this plan is that all autos in the AutoNation web are available for sale. ( Stein )

Selling. AutoNation uses a mass media enterprise. It focuses on repetition, referral, and new clients. To hold success with all three of these, it focuses chiefly on mass selling every bit good as mark selling in the local markets. This scheme is used by publicizing through newspapers, wireless, telecasting, direct mail, and out-of-door hoardings. ( DATAMONITOR ) Every one of these advertizements can be altered in some manner to be presented to multiple local markets at one time. Another really effectual manner of selling is via the cyberspace. Due to its huge popularity, it is really effectual to market AutoNation ‘s shops and vehicle stock list online. While seting ads on web sites, AutoNation focuses on location of where they put the ads. For case, they put ads where the most sums of purchasers will see them. Websites like Google and any other popular hunt engine are premier musca volitanss for advertizements. ( DATAMONITOR )

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Assortment of locations. Another strength of AutoNation is its control over all 269 of its countrywide shops. ( Finlay ) . AutoNation decided in 2007 to put rigorous criterions to command the Finance and Insurance sections of its concern. These criterions were set in order to protect the company from unwanted jobs. Some of the criterions are as follows: Customers are asked to read and subscribe pledges, which contribute to a customer-defined procedure. To assist forestall forces from “ messing with the Numberss ” , professional client presentations are now done electronically. ( Finlay ) The CEO of AutoNation, Mike Jackson, has a direction manner that consists of puting ends and allowing his staff happen their ain ways to make them. ( Earle ) Another manner of verifying satisfactory employees includes an one-year enfranchisement which is given after taking a trial. Changeless preparation is besides given, as AutoNation has 20 Finance and Insurance trainers ( as of 2007 ) .


The undermentioned section examines AutoNation ‘s failings. The failings that will be discussed in this subdivision include: Geographic concentration, weak gross growing in comparing to rivals, and dependance on few automotive trade names.

Geographic Concentration. With the economic system being at one of its lowest points in decennaries, accompanied with the provinces of California and Florida hitting a tough recognition crunch and a worsening existent estate market, the company ‘s geographic concentration has struggled. About half of AutoNation ‘s franchises are located in those two provinces. Harmonizing to Donna Harris, Penske ‘s 169 franchises cover a broader geographic scope than that of AutoNation ( Automotive News, 2008 ) . Even with the economic downswing that the state is confronting right now, Penske has been able to still be successful and compete with AutoNation as the top company in automotive gross revenues. As of 2009, AutoNation has been labeled as the most successful automotive company in 2009. Penske, Sonic Automotive, and Group 1 Automotive have fallen into their several musca volitanss behind AutoNation ( Business Rankings, 2009 ) .

Weak Revenue Growth. Since 2006, AutoNation has recorded hapless fiscal figures. Between the old ages of 2006 and 2008, AutoNation ‘s gross dropped 12 % . The concluding behind this was lower vehicle gross revenues and a diminution in the parts and service concern. As the monetary value of fuel went up, the demand for lower-end fuel efficient autos went up. Therefore, there was n’t much of a market for luxury vehicles right now because many of them have low gas milage ( Datamonitor, 2009 ) . Overall, the diminution in gross revenues can be traced back to competition between AutoNation ‘s chief rivals: Penske, Sonic Automotive, and Group 1 Automotives. Competition among these companies drove down monetary values.

Dependence on few automotive trade names. AutoNation ‘s dependance upon merely a few choice automotive trade names has put the company in a fighting place behind their rivals. CEO of AutoNation, Michael Jackson, has called for lower vehicle stock lists, saying that they create “ direction concerns and high inducements that hurt trade names ” . Another ground he wants to hold low vehicle stock lists is the cost of involvement right now. Jackson ‘s thought is that if he can maintain fewer autos in stock, the funding charges will travel down and there will be smoother transporting agendas ( Automotive News, 2007 ) . Conversely, if he keeps more vehicles in stock list, it ‘s more attractive to the purchaser because there are a assortment of vehicles to take from. There are advantages and disadvantages to both picks ; it is merely hard to do a pick in today ‘s economic system.

Jackson is seeking to vie with the variegation of Penske, who is rated right behind AutoNation in Business Rankings from 2009. 30 % of AutoNation ‘s gross came from Ford, GM, and Chrysler. It besides does non assist much that these companies are in a spot of fiscal problem. Chrysler and GM have late filed for Chapter 11 bankruptcies in 2009. Due to fiscal duties with the United States authorities, Ford has been lucky plenty to contend off their heavy line of recognition. These three companies listed have been bring forthing less, doing AutoNation ‘s gross and gross revenues bead significantly.

In another article by Donna Harris, CEO Mike Jackson says, “ he is experiencing no force per unit area to order vehicles from mills. The production push system of edifice and selling new vehicles is decidedly dead ” ( Automotives News, 2009 ) . The hard currency for clunkers discounts helped determine out AutoNation ‘s stock list from a 60 twenty-four hours supply, down to a 47 twenty-four hours supply. Jackson is confident that AutoNation can keep healthy stock list degrees during this tight recession.


When looking at the chances of AutoNation, there are three distinct chances for AutoNation to take full advantage of. The two chances for AutoNation are a growing in robust automotive parts and accoutrements, a turning market for import/luxury trade name cars.

Handiness for Growth. The first chance available for AutoNation is a robust growing in the automotive parts and an accessories market. In recent old ages the automotive parts and accoutrements market is steadily increasing its growing in the planetary market and it does non look to be decelerating down in the close hereafter. Bing that AutoNation is based in the United States, this corporation will peculiarly see this as a great chance. It is stated in Datamonitor ( 2009 ) that of the full automotive parts and accoutrements market the United States is taking the planetary market in which it is taking by busying 30 % of the entire planetary demand. The United States is besides one of the top taking automotive fabrication states in the universe, which AutoNation is a portion of. AutoNation itself provides a broad scope of car parts and accoutrements that puts itself in a great place to take advantage of this market. Its strong presence in the industry provides a important chance to hike its top line growing. Automotive parts and accoutrements is a extremely diverse market. Which with the steady addition in its growing it could go a one-trillion dollar market which is predicted to be the instance by the terminal of this twelvemonth. Besides the United States nevertheless Europe besides has a strong presence in the automotive parts and accoutrements market. Europe has the 2nd largest market that accounts for an upward of 180 billion dollars ( Datamonitor, 2009 ) . It has been found that the mean age of a auto on the route today is about nearing 10 old ages old. Bing that AutoNation is based in the United States, this corporation will peculiarly see this as a great chance. In the effort to acquire by and salvage money, people are seeking to better what they do hold available and that is to acquire the parts that are needed for their presently owned autos and to salvage money. Standard & A ; Poor ‘s Industry Surveys has really projected that an industry growing of 5 % which is in front of the game and the overall gait of the economic system ( Souers, 2010 )

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Turning Market for Import/Luxury Automobiles. The 2nd chance available for AutoNation is that of a turning market for import/luxury trade name cars. The luxury auto trade name is one of the fastest turning sections in the full United States market, so why would n’t AutoNation tap into this resource? In 2004 entirely, the luxury auto gross revenues went up 6.1 % which comprised of 1.97 million vehicles. At the same clip, the full car industry in the United States grew 1.4 % , which amounts to 16.9 million autos and light trucks. Luxury autos in 2006, nevertheless, covered about 13 % of the full auto market and in 2009 it covered 15 % . Subsequently, it is predicted that in 2012 it could be every bit high as 17 % . It is besides said that in five old ages luxury autos could take up to 21 % of the entire auto market, which is a immense per centum of the market and can be rather good to their gross revenues. The rise in gross revenues of luxury autos is chiefly due to the monetary value failings throughout the vehicle market ( Datamonitor, 2007 ) . In 2009, AutoNation ‘s premium income was a humongous 41 million dollars compared to a past income of the last two old ages of 21 million dollars. In the 4th one-fourth entirely, the luxury retail unit ‘s gross revenues grew 8 % ( AutoNation, 2010 ) . AutoNation is a trader that sells the three largest luxury Sellerss in the market, which are BMW, Lexus, and Cadillac, but it besides sells Mercedes ( Datamonitor, 2007 ) . In add-on to their luxury auto line, they sell imported autos such as Toyota, Honda, and Nissan. Imported autos are besides in great demand because of the length of service. With a stronger operation in the import and luxury markets, they could hold a great chance for the company to better its top line growing.


Change in Economy. AutoNation has many external menaces they need to see. After reexamining the Standard and Poor ‘s chart below, it is obvious that economic system has a batch to make with how good their industry succeeds. The undermentioned shows a 5-year chart and besides how large of a hit that AutoNation took in 2008. ( Poors, 2010 )

Competition. AutoNation should besides maintain path of their rival public presentation. AutoZone presently holds the top market place as of March 28, 2010. Auto gross revenues will stand out in the industries geared more towards car parts alternatively of new autos because people would instead pass money repairing their old autos alternatively of purchasing a new one. This would explicate why car portion companies such as AutoZone and Advance Auto Parts are ranked higher in the industry. This is particularly true in a recession such as the one the state suffered in 2008. Mention to the chart below to see the current rival ‘s gross revenues Numberss. ( Poor ‘s, Competitors ( All ) , 2010 )


AutoNation Inc

28-Mar-2010A aˆ?A NYSEA aˆ?A Symbol AN A aˆ?A In S & A ; P 500

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Market Value-Total ( $ M )


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Harmonizing to S & A ; P ‘s evaluations, Advance Auto Parts is the lone rival to have a 5-Star evaluation. AutoZone, O’Reilly Automotive, AutoNation, Penske, Group 1 and Asbury all have 4 -Star evaluations. Evaluations such as this tabular array show that all of these companies have an equal advantage to take the industry in Gross saless. All evaluations are public ; hence if a company is on top of the list, they people will be more willing to purchase from that company. ( Poor ‘s, Competitors ( Covered by S & A ; P ) , 2010 )

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Foreign Exchange Rate. Other than competition, another major menace would be the foreign exchange rate. Gas monetary values are dependent on this rate. If the value of the dollar keeps diminishing, so the gas monetary values will maintain increasing. This is a major menace to the car industry because if gas monetary values addition, gross revenues will go on to travel down. Less and less people will buy autos and the sum of driving would besides diminish. Many people would get down to utilize public transit or auto pool to work. Peoples would travel on fewer holidaies because of the high gas monetary values. The exchange rate would besides impact car parts cost if the parts were manufactured or purchased internationally. ( Cannon, 2008 )

Minimal pay is besides increasing in the state about every twelvemonth. It is going more and more expensive to engage full clip employees to work in automotive fabrication. This raises the existent monetary value of the vehicles both for consumers and auto traders. Since monetary values are higher, many consumers tend to dicker for the best monetary value they can acquire. Many franchises will accept low offers because they feel that selling it at a low monetary value is better than non selling the auto at all. ( DataMonitor, 2009 )

Recession. The recession of 2008 did non assist the car industry whatsoever. It allowed international auto makers to sell for a lower cost than domestic auto makers. The international companies can perforate the market more efficaciously since the economic system is non making every bit good in the domestic market. In an interview with Mike Jackson, CEO of AutoNation, he states a twosome issues about the recognition that clients must hold to buy a new auto. He said that back in 2007, they were measure uping about 90 % of the appliers for a new auto. 1n 2008, they were lucky to measure up 60 % . Besides 64 % using for car loans were approved in 2008, an tremendous alteration compared to the 83 % that were approved in 2007. This convulsion in recognition markets consequences in AutoNation holding to curtail their recognition conditions, therefore cut downing the gross revenues and border of AutoNation. ( DataMonitor, 2009 )


After our group came up with the strengths, failings, chances, and menaces for AutoNation, Inc. we came up with a list of recommendations that we would wish to do to better AutoNation for the present and future.

Greater geographical concentration

Offer more gas efficient autos to maintain up with consumer demands and the lifting gas monetary values

Expand the car parts country to maintain up with consumer demands and rivals

Summary of Recommendations

The first recommendation our group would wish to do to AutoNation, Inc. is to hold greater geographical concentration throughout the United States. The chief geographical concentrations are based in California and the headquarter province of Florida. These two provinces are staggering from depressed lodging markets which correlate to new and used auto gross revenues. ( Harris, 2009 ) AutoNation should seek to ramify their concatenation of auto traders out to provinces where the auto and lodging markets are wealthier in order to bolster their gross which declined by 23.88 % in 2009. ( “ AutoNation Inc, ” 2010 )

The 2nd recommendation our group would wish to do to AutoNation, Inc. the taking automotive retailing company in the United States is to supply more gas efficient autos to maintain up with the consumer ‘s demands and lifting gas monetary values. In today ‘s economic system, most people who are looking to purchase a new or used auto are looking to happen a gas efficient auto with high rates of stat mis per gallon. In a survey published in September of 2009, about 46 % of people who were asked what were most of import to them when purchasing a new or used auto was high gas efficiency. ( Kraemer, 2009 ) By offering more gas efficient autos, AutoNation will be able to appeal to more consumers throughout the United States and this could significantly raise grosss which have taken a hit over the last few old ages.

The 3rd and concluding recommendation that our group would wish to do to AutoNation, Inc. is to spread out its section in car portion gross revenues. Harmonizing to Standard & A ; Poor ‘s Industry Surveys, it has been projected that there will be a 5 % addition in industrial growing for auto parts which is in front of any other car related classs. ( Souers, 2010 ) Besides the automotive parts and accoutrements demand throughout the United States makes up 30 % of the universe demand for parts and accoutrements. ( Datamonitor, 2009 ) Our group believes that this would be a wise determination for AutoNation to concentrate more attending to this portion of the industry, particularly in bad economic times when many people are looking to repair the vehicle that they presently have instead than travel out and purchase a new or used auto that they may non hold the money for. These are the three major recommendations our group would wish to do for AutoNation, Inc. to better their corporation.