LOOKING FOR LOVE IN THE RIGHT PLACES

"WE LOVE CARS AND THE CAR BUSINESS, AND THAT's why we have more dealerships then anyone else," quips Mike Jackson, CEO of AutoNation Inc.

Of course, the Fort Lauderdale folks at the nation's largest dealership consolidator may also love selling 2,000 vehicles a day, servicing 35,000 daily and taking in $20 billion a year.

Love is a many-splendored thing.

Mr. Jackson was a successful Mercedes-Benz dealer at EuroMotorcars Inc. in Bethesda, MD (a store where he started out sweeping the floors). He then became president of Mercedes-Benz USA before taking the top spot at AutoNation last year.

He says he likes the Florida weather, but misses certain things about New York City, which he dubs "the center of the universe."

He brings both dealership and corporate experience to AutoNation, working with the firm's president and COO, Mike Maroone, another successful dealer-turned-corporate executive.

Mr. Jackson thinks Internet-assisted selling will soon become mainstream in automotive retailing. It will dramatically change the dealership business, which isn't known for sweeping change.

"Auto retailing has been one of the most status quo industries of the last 100 years," says Mr. Jackson.

He says its business model even pre-dates the auto industry "because it's more like horsetrading."

So Mr. Jackson is boldly positioning AutoNation for e-dealing. That's why AutoNation hooked up with America Online in a portal deal.

AutoNation did about $1 billion in business over the Internet last year and expects to do $1.76 billion this year.

Mr. Jackson says individual dealerships won't be able to leverage the Internet like AutoNation intends to do nationally.

But they can take some cues.

For instance, he says, it's important not to lure the Internet customer into a traditional sales process.

He explains, "We have 900 e-specialists in the U.S. who never take the customer outside the e-process. That involves quick response, real cars and real prices on the Internet and haggle-free pricing that's a fair value."

He offered some other industry observations in a session with the Automotive Press Association in Detroit. Among them:

It's a myth that 20%-25% of a car's cost is embedded at the retailing end, insists Mr. Jackson.

"The average dealership's retail gross is 6.5% and a dealership's average cost for that is 5%, so dealers are netting about 1.5%," he says. "Auto retailing is the most effective system to deliver cars to customers. Show me where you can make deep cost cuts there."

If state franchise laws didn't exist, the dealership system would still be pretty similar to what it is now, he says.

Although some people think franchise laws protect the dealers, Mr. Jackson says such statutes protect consumers more.

Why? "Because the automobile is a highly complicated product, and it would be irresponsible to put it out there without a local support system in the form of dealerships."

AutoNation has improved its relations with manufacturers who had been wary of the possibility that if the dealership consolidator got big enough, it could start dictating terms to the automakers and diluting their brand equities.

"There was some tension over the years, but lately we've had some great discussions," says Mr. Jackson.

Taken for a ride?: Who comes across well in a new book on the DaimlerChrysler hook-up, the Americans who made it happen or the Germans who made it happen?

The answer is, well, neither. Juergen Schrempp, Daimler-Benz's CEO, is portrayed as an aggressive and manipulative executive determined to bag the U.S. car company.

Former Chrysler CEO Bob Eaton comes across as often clueless in the deal's initial stages, then weepy in the latter stages.

Bill Vlasic, co-author of "Taken For a Ride: How Daimler-Benz Drove Off with Chrysler and the Risk of Going Global," tells of interviewing a Chrysler executive as a source for the book. The executive mentioned in passing that Mr. Eaton cried at a meeting.

Recalls Mr. Vlasic, "I said, 'Wait a minute, tell me about the meeting at which Bob Eaton cried.' And the guy said, 'Which one?'"

Mr. Eaton apparently remains sensitive to this day. Mr. Vlasic says he talked to him after "Taken For a Ride" came out. "He personalized the title," Mr. Vlasic says of Mr. Eaton.

Mr. Vlasic and his collaborator, Bradly Stertz, a fellow Detroit News journalist, hammer home two conclusions.

Firstly, this was no merger or what Mr. Eaton initially called "a marriage of two equals." It was a flat-out take over of an American company by a German company.

Secondly, a lot of Americans are upset about it.

"Most people we talked to, especially Chrysler workers, say they regret the sale even though 95% of them are not affected," says Mr. Vlasic. "There's something about the passing of Chrysler's independence."

Adds Mr. Stertz, speaking to the Automotive Press Association in Detroit, "The feeling is that a piece of America is lost."

Steve Finlay is editor of Ward's Dealer Business. His e-mail address is: [email protected]