AutoNation credits its digital tools with both driving down costs and increasing opportunities in the business of selling new and used cars.
The nation’s largest automotive retailer, which owns and operates more than 300 locations in the U.S., said digital capabilities have enabled it to exploit the new operating environment, drive sustainable advantages and generate new cost efficiencies.
“We’ve built the brand, we have the digital platform and we have the stores — how they operate as delivery centers, speed-to-market reconditioning centers and acquisition centers,” AutoNation CEO and Director Mike Jackson said of its stand-alone, pre-owned vehicle stores called AutoNation USA. “Those are the three principal activities that take place within the USA store.”
Offering Omnichannel Capabilities
Jackson highlighted digital tools during a Thursday (Oct. 21) earnings call. The presentation released along with the call outlined three digital tools that are used in all the company’s stores.
First, there’s the omnichannel platform called AutoNation Express. This features advanced digital capabilities that speed and simplify the customer shopping and purchasing experience both online and in-store.
Customers can search new and used vehicles based on monthly payment and vehicle attributes. Then, in a mobile-optimized, step-by-step digital experience, they can estimate trade-ins instantly, calculate payments, select vehicle protection products, apply for financing, schedule in-store pickup or home delivery and upload key documents. If the customer chooses “store-to-door delivery,” they can avoid visiting the showroom.
“In our used vehicle business, our strong self-sourcing capability, digital tools and customer-focused sales processes are a competitive advantage that has allowed us to outperform our peers and the broader used vehicle market,” Jackson said.
Leveraging Customer Data
Internally, AutoNation uses two data and analytics tools that leverage millions of sales and service transactions.
One, the Equity Mining Tool, appraises a customer’s current vehicle and identifies a newer replacement vehicle for a similar or lower payment. It also shows household vehicles, service history, propensity to purchase and customer financial service product history.
That tool links to another one called Customer 360, which has real-time data for 9 million customers. This provides a complete picture of customers, including demographics, garage information, service and collision information, vehicle information, website behavior and customer outreach.
Together, these enable AutoNation to provide a customized experience while strengthening its relationships and identifying additional sales and service opportunities.
Continuing to Invest
In addition, AutoNation’s digital capabilities support significant expense leverage. Speaking about selling, general and administration (SG&A) expenses during the earnings call, the company’s chief financial officer said the efficiencies delivered by digital tools have enabled AutoNation to operate with 3,000 fewer employees in stores, on a same-store basis year over year.
“It’s going to be a long-term thing, but I clearly think we’ve demonstrated that we can operate the business at a lower relative cost than we’ve done historically, in large part by the deployment of digital tools that are making our sales and service associates far more effective,” said AutoNation Executive Vice President and Chief Financial Officer Joe Lower.
The company will continue to invest in digital tools. Noting that AutoNation has stepped up its merger and acquisition (M&A) activity, Jackson added, “But at the same time, we intend to grow with AutoNation USA, we intend to invest in our existing stores, and we intend to invest in our digital capability. We’re in a position of doing all of the above.”