AutoNation Inc. on-line looks to license other dealers

AutoNation Inc. is launching a new national Internet sales site that will be licensed to dealers not owned by the megadealer in markets outside its 28-market network.

AutoNation, which expects its Internet sales to be in the billions of dollars, is test-marketing the online initiative in Tampa, FL, prior to a national rollout later this year.

It features AutoNation's exclusive Internet financing provider, the new Giggo.com website introduced this year by debis Financial Services, a subsidiary of Daimler/Chrysler's debis AG affiliate.

Both AutoNation's site - Auto-NationDirect.com - and Giggo.com - offer inventory scanning, detailed pricing and leasing data, financing and insurance terms and applications, purchasing arrangements and final delivery to homes or offices with or without customers' prior showroom visits.

Steven R. Berrard, co-CEO of AutoNation, lays out ambitious goals for increasing the company's market penetration.

He says, "The website will help us drive high market share gains to become the leading auto retailer on the Internet. Many top dealers have expressed interest in becoming licensees, and they will have exclusive markets with a possibility of an equity investment by us if needed."

Mike Maroone, president of AutoNation's auto retail group, predicted $750 million in vehicle sales off the new website through 1999, with $1.5 billion in 2000 and $3 billion in 2001.

AutoNation's sales last year through 270 dealerships with about 400 franchises totaled $14.3 billion.

AutoNationDirect.com will be based at the parent company's headquarters in Fort Lauderdale, FL. It will be staffed by about 600 Internet "sales guides" located in a central call center and at referral dealerships, on an initial 16-hour-a-day basis.

Jeff Danford, director of Dallas-based Giggo.com, says its financing and insuring capabilities are fully integrated into the AutoNationDirect.com Website.

"The partnership is posed to revolutionize the way cars are purchased today," he says.

Some critics see such Internet setups as a way to circumvent dealers.

But that's not a threat, says Russell Shelton, past president of the Detroit Auto Dealers Assn. and owner of Shelton Pontiac-Buick, Rochester Hills, MI.

"I remain convinced that most customers will find it important to go to dealerships to inspect and test-drive vehicles prior to purchase," says Mr. Shelton.

His dealership uses DADA's used-vehicle website, www.dadacars.com.

A prominent early joiner of the AutoNation chain in the Southwest, who asks not to be identified, says the megadealer has given the Internet sales program higher priority after slowing down its dealership acquisition pace this year.

"The lag in the AutoNation stock price has been a stumbling block to more acquisitions," says the dealer. "The price has remained stuck at about $16-$17 a share, down from $30 a year ago, and dealers have been reluctant to accept large amounts of stock for selling to AutoNation."

Mr. Maroone, however, points to the record of the first AutoNation platform pilot program at 17 Denver area dealerships, as evidence of the appeal of establishing an AutoNation "brand."

"New-car and used-car sales at our John Elway AutoNation stores jumped up to 40% above the first half of 1998 in Denver," says Mr. Maroone. "We believe the AutoNation 'brand' off the Internet will lead to comparable sales gains at participating dealers elsewhere."