Automobile
superstores,
one-price
experiments
and the
Internet may
change the face
of automotive
retailing.
ALAN ABRAMS
SPECIAL TO THE JEWISH NEWS
nging Marketplace
magine entering a vast automobile show-
room where the best models of every man-
ufacturer is displayed by price range,
side-by-side. There are no high, or even
low-pressure, salesmen to pitch you on
the vehicles' merits, or haggle with you
over the sticker price. You don't have to
hammer out a deal which has to be taken into
a back office for the sales manager to approve.
Bring the kids with you, no need for a
babysitter. There's a supervised Childplay Cen-
ter in which to safely park them. Need some
information about a car? You'll find it on a con-
sumer-friendly touch-screen computer inside
a kiosk.
With all these amenities, buying your next
automobile could be as easy as buying a tele-
vision set, washing machine or stereo at a one-
stop superstore.
But can automobiles be sold that way, as
just an expensive appliance? Brace yourself for
a shock, because it is already happening.
Wayne Huizenga, flush with the $8.5 billion
he got from selling Blockbuster Video to Via-
com, became the largest auto dealer in the
country virtually overnight with his AutoNa-
tion stores, the car dealership arm of his Re-
public Industries.
Circuit City's CarMax is running hot on Mr.
Huizenga's heels.
Both are solidly backed, financed with Wall
Street money, allowing
AutoNation to buy out
franchised automobile
dealers for as high as 18
to 20 times earnings,
paid in stock. And you
don't have to hold on to
the stock, you can flip it
the next day.
That's a far cry from
the standard industry
buyout of 2 to 3 times
earnings. It would be dif-
ficult to imagine any
metro Detroit dealer
turning down that kind
of offer if AutoNation
came knocking at the
door.
A third player in the
auto superstore stakes,
Driver's Mart, is a coop-
erative venture of deal-
ers nationwide formed
for volume selling of new
and used cars. It was cre-
ated by Bert Boeckmann,
the Van Nuys, Calif.-
Marvin Tamaroff does
not feel threatened.
based owner of the nation's largest
Ford dealership. Mr. Boeckmann,
who also owns two Saturn dealer-
ships, actually said "no" when Auto-
Nation made him. an offer for his
company which it thought he
couldn't refuse.
AutoNation already has a beach-
head in the Motor City, with one lo-
cation on Van Dyke in Sterling
Heights, and the recent acquisition
of Downriver's Taylor Jeep-Eagle,
originally a Chrysler pilot program
store. Both geographical locations
are considered by experts as solid
used car markets.
It is difficult to ignore the appeal
of AutoNation's advertising cam-
paign. A recent typical ad pro-
claimed, in bold type, "You won't
have to haggle at AutoNation USA.
When you see how low our prices are,
you'll know why."
The ad listed an impressive array
of 1992 to 1996 pre-owned vehicles
by classification: compact, midsize,
minivans, sports utilities, trucks,
sports cars and luxury. Prices
ranged from $7,395 for a '93 Chevro-
let Cavalier VL with 53,000 miles,
to $29,895 for a '93 Toyota Land
Cruiser with 45,000 on the
speedometer.
The company promises a 99-day George Glassman: The chains have had an impact.
warranty, a money-back guarantee,
and says the vehides have been reconditioned extinct as television stores, the ripple effect
throughout the economy would tremendously
"to perform as new."
The most respected and accurate automo- impact real estate markets, because of the
bile industry analyst, J.D. Power and Associ- - prime suburban commercial land many deal-
ates, is already predicting that with the advent erships are built upon. Auto dealers were the
of the superstores, automobile dealerships, as first to abandon the central cities for the sub-
we know them today, are dinosaurs, and will urbs. And when those suburbs filled up, they
be history by 2015.
would move out farther.
For those with short memories, there were
In addition, the trend could further slash al-
once factory-franchised television stores for ready diminishing sources of traditional ad-
brands like Zenith, Motorola, RCA Victor, vertising revenue at newspapers and radio and
Magnavox and Philco on virtually every com- television broadcasting stations.
mercial street corner. But that was before the
Even if the change in automobile market-
advent of solid-state circuitry, improved per- ing won't be that earthshaking, the system of
formance and reliability, and the discount ap- automobile distribution is undergoing its most
pliance superstores like Highland and Adray. drastic changes since the dealer franchise sys-
New-car auto dealerships across the coun- tem was first instituted by manufacturers.
try are already down to about 20,000, compared
It started with the innovative manner in
to 50,000 in 1950.
which Saturn was introduced and marketed,
Addressing that shrinkage, J.D. Power, in with franchises protected, and limited to just
a February 1997 Forbes magazine interview 250 across the country. Saturn dealers sell more
said, "Fewer and fewer sons and daughters are cars per dealership than any make except Ford,
taking over the dealerships ... A lot of dealers and Ford's sales figures are inflated by their
themselves don't want to risk the family for- fleet sales to rental companies.
tune on their sons and daughters because they
How do some of the area's best-known, high-
know how tough it is going to be."
Should automobile dealerships become as CHANGING MARKETPLACE page 78
PHOTO BY BILL HANSEN
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