AutoNation USA stores feature no-haggle vehicle pricing and a five-day or 250-mile money-back guarantee.
The newer stores will include reconditioning centers to cut transport costs and speed the time to market. They will have some service capability but won’t include large service departments, Jackson said.
“Our service capacity we put in the stores simply didn’t pan out,” he told analysts. “And we don’t want to repeat that in future stores.”
The AutoNation USA portfolio first broke even in the second quarter of 2019. AutoNation CFO Joseph Lower told analysts that the stores are generating a little more than $2 million in profit per quarter.
Jackson said the new locations should break even within a year and generate targeted returns, which weren’t disclosed, in 18 months to two years.
“When we launched the USA stores, we said we’d build five as pilot stores and then pause until we had a clear path to profitability, had paid our tuition and figured out what works and what does not work,” Jackson said in an interview. “And we’re now through that, and the stores are solidly profitable.”
Jackson told Automotive News that stores likely will come in existing or contiguous markets “where we can leverage the AutoNation brand and infrastructure as a very cost-efficient way to do this without exorbitant marketing costs.”
He said more information on the rollout would be provided during the retailer’s third-quarter earnings call.
A store count of 25 would put AutoNation USA on pace with Sonic Automotive Inc.’s planned build-out of its EchoPark used-vehicle-only superstores. Sonic has 10 EchoPark locations and plans to add at least three more this year and four to six in 2021. It has a goal of at least 25 locations through 2024.
Penske Automotive Group Inc. operates 16 used-vehicle supercenters, including six in the U.S., and auto retailers also compete with used-vehicle startups Carvana, Vroom and Shift, as well as used-vehicle giant CarMax Inc.
