Used-Car Chain Seeks Approval for Site in Oxnard
Hoping to secure a prime location off the Ventura Freeway, representatives of the fast-growing AutoNation USA chain of huge used-car stores are scheduled to meet with Oxnard city officials tonight.
AutoNation--founded by Florida-based business mogul H. Wayne Huizenga--wants to open a 1,070-car store on 20 acres directly south of the Oxnard Auto Center.
The city and some other car dealers are eager to go along for the ride, despite some fears it could drive small used-car dealers out of the city and further drain business from downtown.
The location is one of five planned Southern California sites for the AutoNation chain, which aims to entice used-car buyers with a radical approach to sales and service.
By eliminating the traditional haggling with fixed prices, offering limited service warranties and return policies, and providing a massive selection of cars, the chain boasts of revolutionizing the used-auto industry.
“We’ve based this on research on what customers like and don’t like about the used-car business,” AutoNation spokesman Jim Donahue said. “And what they don’t like is the negotiation, the lack of a warranty and the poor selection. We’ve solved all of those.”
In fact, many analysts view AutoNation as the Wal-Mart of the used-car industry--a comparison Donahue accepts.
Small used-car dealers across Ventura County can expect stiff competition from AutoNation, he said.
“The small company that focuses on customer service, price and selection will do just fine,” Donahue said. “The company that fails to focus on what the customer wants is going to be in trouble.
“Wal-Mart did not come to be because Wal-Mart said the world will be this way. Wal-Mart came to be because customers wanted it. Wal-Mart offers a large selection and low prices in a friendly shopping environment. That’s what we’re doing.”
AutoNation has opened 24 stores, mostly in the southeastern United States. Now the push is in Southern California.
Aside from the Oxnard store, which the company hopes to open in 1998, AutoNation plans to open dealerships in Rancho Cucamonga, Irvine, Long Beach and Los Angeles.
“We would not look at Oxnard in isolation,” Donahue said. “We’re looking at the entire L.A. market.”
With the promise of a sales-tax bonanza from another major auto retailer, city leaders say they are eager to see Oxnard become part of the company’s expansion.
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Officials at the city’s Greater Oxnard Economic Development Corp., for instance, said that AutoNation officials project $100 million in annual sales. That would translate into $1 million a year in sales-tax revenue for Oxnard, development corporation officials said.
“I think this is the next big thing for cars, and the city needs to be a player,” City Councilman Dean Maulhardt said.
Maulhardt cited the cluster concept of retail marketing, which reasons that grouping numerous competing stores together increases shopping options and brings more customers to a given area--benefiting, in theory, everyone. He predicts local used-car dealers will get a boost from AutoNation.
Using similar reasoning, officials at the Oxnard Auto Center--where dealers sell new and used cars directly across from the proposed AutoNation site--have expressed support for the project.
Oxnard Auto Center Assn. President Larry Lee said the center wanted to bring in AutoNation as a tenant, but didn’t have space for such a massive project.
“Since they are looking for a bigger parcel, there’s not much we can do,” he said. “We welcome them to Oxnard. They’ll bring a lot more people here.”
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Analysts and some local business leaders, however, are not convinced that AutoNation will have that kind of effect.
Auto industry analyst Chris Cedergen of Nextrend, a Thousand Oaks consulting firm, said new-car dealers are the least vulnerable to AutoNation.
But some of the $100 million in expected AutoNation sales will certainly come at the expense of local, traditional, small-lot used-car dealers. Such losses at small lots would reduce the projected $1 million in annual sales-tax revenue from AutoNation, he said.
The many small used-car dealers along Oxnard Boulevard and Thompson Boulevard in Ventura have the most to fear, Cedergen said.
“I think the weaker ones run the potential of being displaced,” he said. “I still think they can compete by focusing on niche markets. Some actually specialize in people with bad credit, and older, much cheaper cars.”
At Bob’s Used Cars on Oxnard Boulevard, manager Jose Ordas said he expects to survive if AutoNation comes to Oxnard.
Ordas said customers like the service at his 55-space lot, where most of the cars are older than those AutoNation sells.
Still, Ordas said, it seems that Oxnard city officials are always willing to cater to the big company, without taking small businesses into account. He noted that the 20-acre freeway site AutoNation wants to use was originally zoned for manufacturing.
On Monday night, planning commissioners will consider changing the zoning designation to allow for an auto center. If commissioners grant the zoning change, the project will go to the City Council for final approval.
“I don’t think it’s fair,” said Ordas of the proposed zoning change. “Does that mean that anyone that comes here with money, we accommodate them? Is that the kind of city we are?”
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Tila Estrada, president of the Oxnard Downtowners Assn., argued that the city’s focus on developing near the Ventura Freeway has hurt the downtown business district.
“We have a lot of little guys,” Estrada said. “The small downtown lots are doing an adequate job of serving the Latinos.
“I don’t think we need it,” she said of AutoNation. “But I don’t think we can stop it.”
The AutoNation chain is just one facet of Huizenga’s plan to become a leader in the sales of new and used cars.
Huizenga founded two Fortune 500 companies and Blockbuster Entertainment, and his Republic Industries is the parent company of AutoNation.
Republic Industries has been buying new-car dealerships and car-rental companies as part of its strategy, recently acquiring about 20 new-car dealerships in Southern California.
The idea is that Republic would take leased cars from its new-car dealerships, refurbish them and sell them at AutoNation stores. Having such a network of new- and used-car dealerships would let the company cut transportation, advertising and other costs, Donahue said.
AutoNation stores boast a broad selection of cars, displayed in showrooms that dwarf tiny mom-and-pop car lots. Its Oxnard location would have 784 cars outdoors and 286 in an indoor showroom. The company limits its stores to cars from 1 to 5 years old.
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Moreover, with fixed prices, the company eliminates the haggling traditionally associated with used-car shopping.
AutoNation also offers a three-month comprehensive warranty and seven-day return policy--guarantees that company officials say eliminate the anxiety often associated with used-car shopping.
