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Monday, Dec 4, 2023

AutoNation Ad Campaign Starts Run at Top Speed

AutoNation Ad Campaign Starts Run at Top Speed By SHELLY GARCIA Senior Reporter For some time now, the new breed of automotive megadealers large publicly held companies with outlets nationwide has been encroaching on territory once owned by independent small business owners. Now the largest of those dealers has landed with a bang in the greater San Fernando Valley area. After quietly buying up 43 car dealerships in Southern California, eight of them in the San Fernando and Santa Clarita valleys, over the past few years, AutoNation Inc. has rolled out a $30-million-plus advertising blitz under the brand name Power with sports superstar Wayne Gretzky as spokesman. “We’re trying to gain purchase consideration,” said Michael E. Maroone, president and COO of AutoNation. Since it launched in May, billboards, television and radio commercials announce the Power brand and tout the number of dealerships in Southern California as well as the standard industry messages about selection, price and service. Maroone said the company has been pleased with the results of the campaign so far. “The launch was very successful,” he said. “It exceeded our expectations in terms of sales. We improved our market share.” AutoNation, with about $3 billion in Southern California sales, holds about a 10 percent share of the market. Locally its outlets include Magic Lincoln Mercury, Power Dodge, Power Ford, Power Honda, Power Chevrolet and Valencia BMW, all in Valencia, and Land Rover Encino. The concentration of North L.A. stores in the Santa Clarita Valley was not deliberate, but rather a reflection of the opportunities that presented themselves, company officials said. While the Ft. Lauderdale-based company, with about 375 dealerships in 17 states and sales of nearly $20 billion, would seem to have an advantage over single-store operators, independent dealers say there is no measurable difference in these competitors. “I don’t have a problem with having them as a competitor,” said Tim Smith, co-owner and president of Bob Smith BMW in Canoga Park. “There are several corporate ownership situations in the BMW network out here, and I don’t feel they compete any differently.” Indeed, Smith soon will relocate his dealership to Calabasas where his neighbor will be an Acura dealer owned by another large national player, Sonic Automotive. AutoNation’s size affords economies of scale affecting everything from the cost of money to the cost of uniforms. But while chains like Wal-Mart and Circuit City have dominated their respective markets, often pushing out independent dealers, because of their ability to buy goods more cheaply and pass the savings along to the customers, auto dealers have no such advantage. No matter the size, all auto dealers pay the same price for the cars they buy from the manufacturers. And independents say that, so far at least, they have no trouble competing with Power on price. Indeed, AutoNation first launched with a no-haggle, one-price strategy, but in Southern California it found that the competition was too steep to go that route. “With the Internet and the level of competition, we made a decision to allow our markets to sell in different ways, “Maroone said. Some dealers believe that price is the single-most important factor that affects the consumers’ purchase decision, and as long as they are able to satisfy the urge to barter, their business is assured. “You know what? You can be nice to people but the bottom line is price,” said Don Redding, president and CEO of Hamer Toyota in Mission Hills. “I still believe that. I always will believe that. People have to feel like they’re getting a good deal.” While AutoNation has the advantage of deeper pockets for ad spending, these dealers say that they are nevertheless able to compete for share of mind just as well. “It just gives them more bang for the buck,” said John McClure, vice president and owner of Courtesy Chevrolet in the Thousand Oaks Auto Mall. “But it’s similar to what we do in the Thousand Oaks Auto Mall.” Independents like Courtesy contribute with others in the location to a general advertising fund designed to draw customers to the locale. And some dealers say they don’t want the reach that an AutoNation has with its larger ad budget. “We used to advertise in a wider area, but we pulled it back into our own backyard,” said Redding, who estimates his dealership spends about $200,000 a month on advertising. “Most of the people we were attracting outside the area, we don’t get their service business or their return business. If we sell in our own backyard, we have a chance of doing service on the car as long as they have the car.” In fact, when all is said and done, success may rest with looking and acting more like an independent dealers, no matter the corporate ownership. A number of the companies that have acquired stores in Southern California have kept the original dealer name. Despite its branding strategy, so has AutoNation in some cases where there is a long history and tradition with customers. And even in those stores that have been branded with the Power name, the company has typically kept the previous management. “The AutoNation dealerships are, in large measure, modeled after the independent dealership,” said Rik Kinney, senior vice president at The Dohring Co., a consultancy in Glendale. “They look and feel like the independent.” Still, as these companies grow, some believe smaller operators will begin to feel the pressure of their size and clout. AutoNation officials say they are seeking more stores in the Southern California area. “We have people knocking on doors talking to people in the industry,” said Maroone. “We love the Southern California market. We’re always looking for additional acquisitions.”

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