One on One with AutoNation CEO Mike Jackson

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MB: And what did your Mercedes background and experience provide?
MJ: Having worked for Daimler for so many years, I understood strategic planning, how to give vision and direction to a large enterprise, how to get a large enterprise moving in the same direction with everyone pulling in the same direction.

MB: And the two combine have produced what?
MJ: This feel I have for the business was a tremendous plus for me and I don't think you could do it without it. It's one of the factors one sees when a manufacturer tries to move to retail. How quickly they disconnect. How badly it goes. Because they don't have that sensitivity—if you don't have that sensitivity you have huge blind spots and are going to make terrible mistakes and end up in trouble very quickly.

On AutoNation's Business Operations

MB: Reviewing your recent annual report and the SEC 10K form, I was amazed at the growth of profits in the service businesses. As the biggest auto retailer in America you set the bar that every other automobile dealer would like to emulate. Can you tell me how you grew this side of the business?
MJ: The first day I walked through the door here at AutoNation, I told everybody we have a tremendous opportunity on the service and parts side and that we are going to put in place strategies and practices that go after that portion of the business.

MB: With most manufacturers improving their quality it has resulted in lower warranty repairs, and most owners after their payments or leases expire go to other sources for service and repairs. What did AutoNation do?
MJ: The key is to come at it from the customers' per-spective. Provide convenience, quality, value and pricing—because we have the hard part—the technical expertise. We have more technical expertise on these products than anyone else. But we still have to be convenient, offer value and quality and a guarantee.

MB: What were some of the new concepts and innovations?
MJ: We basically had to reinvent the way work was done in the service department. The idea of one technican working on one car is inefficient, highly inefficient. Now we take a team approach with different skill levels within the team so that there is a good balance so you are fully covered. That increased our productivity by 30 to 35 percent.

AutoNation's Car Business

MB:With 37 different brands, both domestic and international in your inventories, some must sell better than others. What are your best-selling brands?
MJ:We take a diversified approach to the business. That's one of the advantages of being as large as we are. We are diversified by business type—service, parts, used cars, new cars, financing and insurance, and we are diversified geographically, everything from California through the whole Sunbelt to Florida. So, today while we have difficulties in Florida and California because of the speculative real estate market, Texas remains fine. So, you spread your risk.

MB: Years ago if you were selling new cars the word 'dealer' was used, now it's 'retailer.' Which do you prefer and why?
MJ: We are in the retail business. That has to get in everyone's head. Once you switch it to retailer rather than this idea of dealing—which is adversarial on negotiation and all that—we are there to take care of customers. Today, customers have more choice than ever and they love the choice. But with choice comes complexity. The customers are also time constrained.

MB: How do you help AutoNation's customers solve the issue of time constraint?
MJ: With solutions. Customers are looking to retailers for solutions, “Who is going to give me a solution? I have a need. I have a want. I love all this choice. I need a solution.” They want the most added-value in the shortest amount of time possible.