BUSINESSWEEK ONLINE : MARCH 13, 2000 ISSUE
PEOPLE Wayne Huizenga: "We Were Accused of Being Drunken Sailors" AutoNation grew too fast, concedes its founder, who remains committed to one-price car-selling For a time, it seemed that Florida billionaire H. Wayne Huizenga had the Midas touch. Through the 1990s, he built Waste Management and Blockbuster Entertainment into huge enterprises, revolutionizing those industries and making billions for himself and many investors along the way. Then AutoNation happened. Huizenga launched the business in 1995 with the intention of wresting the auto-retail business from pushy independent car dealers and selling vehicles with fixed prices at his AutoNation used-car megastores and new-car dealerships. But no-haggle, one-price selling hasn't paid off, and the megastores, now shuttered, lost money. Huizenga has brought in new leadership several times and the stock has fallen from a high of $45 a share to its current price of $8. Huizenga owns, through various partnerships, 24.8 million shares of AutoNation, a stake now worth about $190 million, and has options for 6.5 million more. Now that the company is dumping its used-car stores and spinning off its rental-car business, AutoNation is strictly a dealer chain. Last October, Huizenga brought in Michael J. Jackson, the man who led Mercedes-Benz to its turnaround in the competitive U.S. luxury-car market, to bring in bigger profits and regain Wall Street's respect. Business Week Correspondent David Welch sat with Huizenga in AutoNation's Fort Lauderdale headquarters to talk about the company's future. Q: How did you end up selecting Jackson for the job? A: If you go through the industry, we're the biggest auto-retail company by far. So there's no competition to steal from. Then you go to the auto manufacturers. Mike was the first guy I called. He knows the business side and the manufacturer's side. And he did a tremendous job at Mercedes. Q: Last year, Mercedes was doing well, and Jackson had the top job. How did pry him away to take a turnaround job like AutoNation? A: I'm not minimizing our problems, but I never looked at our company as a turnaround situation. I wouldn't give myself credit for prying him away from Mercedes. We're the largest dealer in the U.S. -- ever. The nearest competitor is one-fourth our size. We're in the right markets. Mike saw that. Q: Jackson has been credited with the turnaround at Mercedes, but AutoNation is a public company that has lost credibility on Wall Street. Did you consider hiring someone with more experience in dealing with investors? A: People make a big to-do about talking to the Street. Every day, companies go public, and no one knows anything about the Street. Mike is an intelligent guy and knows the business. If you know the business, the Street takes care of itself. Q: What will it take to regain credibility on Wall Street? A: Time. If you say you're going to make 15 cents a share, you better make 15 cents a share. For our company, it will take a couple of quarters. Q: Does that mean we can expect investors to get interested in AutoNation by the end of the year? A: Wall Street is sitting on its hands right now. If we execute, they'll come back. The segment is down -- two-thirds of all stocks last year were down. That will change. Sooner or later, some of these Internet companies will have to start making money. Q: Why did AutoNation stock fall so low? A: We've had our disappointments here. To be honest, the stock got ahead of itself. The greed factor kicks in, and the stock gets pushed up. When you're an officer of the company, you don't like to see that. We have to find a happy medium on our way back. I've ridden it down, and I'll ride it back up. Q: Many of the company's critics say it was your massive acquisition spree that led to the company's runaway costs. What happened? A: I've been through this before with Blockbuster and Waste Management. We grew too fast for a reason. We had a plan to buy the top dealers in every one of our markets before someone else bought them. We were accused of being drunken sailors or going on a spree. Now it's time to pause. Costs got out of whack. Q: Do you think buyers will soon use the Internet to completely bypass a dealership? A: People coming in on the Internet still want to see the car and take it for a test drive. We do direct selling and delivery, but only 2% are home deliveries. It's a small number, but there are still a lot of cars being sold on the Internet. Q: One-price, no-haggle selling didn't take off like you thought it would. Do you still believe it's the best way to sell cars? A: We do. You still hear jokes about car salesman. We're going to change that. There's no reason people should be treated rudely just because they're buying a car. They should be treated better. We're one-price in Denver, and we'll be in another market soon. Q: But don't buyers still prefer to negotiate? A: The Internet is more popular now than it was two or three years ago. What's going to happen with the Net is you'll see one-price pricing because we'll quote one price on the Internet. Q: When Jackson took over, he immediately closed the used-car megastores and laid off 2,000 people. Does he have the authority to make such bold moves on his own? A: He can't arbitrarily make that decision. Mike had to convince the board that it was the right thing to do. It was a bold move, but it was the right move. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS AutoNation's Driver Takes a Sharp Turn RESUME: Michael J. Jackson ONLINE ORIGINAL: Wayne Huizenga: "We Were Accused of Being Drunken Sailors" INTERACT E-Mail to Business Week Online

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