Visit to Low-Key Used-Car Lot Puts Buyers in Driver’s Seat
Fearing they would be fleeced in their search for a used truck, Jim and Marilyn Hardt visited the new AutoNation USA dealership in Oxnard to see if what they’d heard was true.
Like many in the market for a used car, the Ventura couple were wary of being pressed by packs of smooth-talking hucksters into buying something they didn’t want.
So they turned to the county’s newest auto retailer, where they understood they could take their time without having to be on the lookout for scheming salespeople.
“Whenever you’re out buying a car, you kind of think you’re going to be had,” said Marilyn Hardt. “That’s why we’re here. . . . We heard it was supposed to be different.”
And so it was.
Upon entering the dealership’s airy showroom, all they got from employees was a cheery “hello” and directions to a kiosk where they could peruse the inventory via touch-screen computers.
Only once did an AutoNation employee approach them--to ask if they needed any help.
Both thought the experience refreshing, novel and disarming, which is exactly what company officials were hoping for.
In what some industry analysts are calling the initial salvo fired in an attempt to revolutionize the antiquated and widely disliked manner in which cars are sold, AutoNation has entered the Ventura County market with a bang.
Opened two weeks ago, the Oxnard outlet--the chain’s 40th store in the country--has become an object of curiosity for many local consumers who are interested in learning more about its reputed “no-haggling” and “low-pressure” sales environment.
“It’s definitely a different way of doing business, but it’s exactly what our guests [customers] want,” said David Haile, general manager of the Oxnard store. “They want to feel safe, like they’re the boss and in control of what happens, which is exactly the way we do things here.”
Over the last 40 years, the automotive industry has gone through radical changes, from the way materials are acquired to how labor is managed to the amount of money funneled into research, development and design.
But the way cars are sold has remained unchanged in that time. The strategies and policies employed by manufacturers and retailers are virtually the same as they were in 1960.
Not only is this process inefficient, analysts say, it is expensive, accounting for up to 30% of a vehicle’s total cost.
In addition, the lucrative industry, which generated more than $310 billion in sales in 1997, has no dominant players and is spread out among more than 60,000 used-car retailers across the nation.
“It’s kind of a crazy process that heavily favors the dealers,” said George Hoffer, an economics professor at Virginia Commonwealth University and an expert on the automotive industry. “People are sick and tired of this, and they’re ready for a change, which is why companies like AutoNation are starting to move in. . . . They’re looking to consolidate the industry and bring about some real change in the way business is done.”
Owned by Republic Industries Inc. of Fort Lauderdale, Fla., and headed by self-made billionaire Wayne Huizenga, AutoNation got its start a little more than three years ago with a large outlet in Coconut Grove, Fla.
Since then, the used-car chain has expanded into 12 states across the Southeast, Midwest and West, with an average outlet featuring a 20-acre lot and 24,000 square feet of showroom space.
Huizenga, who started Blockbuster Video, also owns National and Alamo car rental agencies and, with more than 200 new car dealerships, has captured the nation’s largest share of the new-car market.
In its effort to lure customers and gain a greater hold on the used-car market, AutoNation is trying to establish itself as a retailer of quality cars where customers--or guests, as AutoNation employees refer to them--can shop knowing exactly what their purchase will cost.
In addition to its no-haggling policy, the company offers a three-day, 150-mile, money-back guarantee and a 99-day, 3,300-mile limited warranty. Further, AutoNation provides customers with 24-hour roadside assistance for one year after the date of purchase.
“[AutoNation] is more than just the one-price, no-haggling policy,” said company spokesman Oscar Suris. “Pricing is just one dimension. We want this to be an experience, and one that will keep people coming back.”
However, there are questions as to whether AutoNation will be able to accomplish that goal in light of the rather inflexible market for used cars.
While customers may enjoy the no-haggling policy and purchase guarantees, Hoffer said price is still the most important factor when purchasing a car. Mega-stores like AutoNation, he said, do not enjoy any economies of scale, meaning that they are not able to buy in bulk and transfer those savings on to clients.
“That’s their fatal flaw,” he said. “Until they figure out how to do that and how to translate those savings into the pockets of their customers, they’re not going to be as successful as they’d like.”
Suris, however, said that because the company is so large, it can save customers money through other means, such as consolidating distribution and labor costs.
“By virtue of our size, we enjoy economies of scale,” he said. “We have the expertise and leverage to get deals that are going to be better than our rivals.”
However, of the more than 600 cars in stock at AutoNation in Oxnard, few are priced at less than $10,000. Most fall between $12,000 and $22,000, with a few climbing into the $30,000-to-$40,000 range.
That’s a far cry from the $2,000 to $4,000 that I.J. Melchior generally asks for cars at his Ventura car lot, but he’s also selling cars that are generally older and more worn than the ones at AutoNation.
“Well, I’m not disappointed,” said Melchior, the owner of Afternoon Motors and president of the Independent Auto Dealers of Ventura County. “They’re looking at a completely different demographic--people who have more money.”
After paging through the AutoNation inventory, the Hardts said they were going to shop around and compare prices, but what they saw at AutoNation intrigued them.
“I’ve seen lots of cars that are cheaper than what I’m finding here, but then again I don’t know how good they’re going to run,” said Jim Hardt. “Here, it looks like they’re better quality--I mean, they’ve been checked out--and I like those warranties.”
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