At the same time, the chain is kicking off an extensive newspaper campaign in the seven markets in which it does business, with ads addressing "myths" about used-car buying.
John Bradley, hired in May from retailer Best Buy Co. as director of merchandise planning, is developing the new strategy for the chain. He declined to discuss potential strategies last week, saying he didn't think his employer "wanted to broadcast" its plans.
'A NUMBER OF STRATEGIES'
Marc Cannon, VP-marketing communications, said Mr. Bradley is "working on a number of merchandising strategies that are still being formulated."
But auto consultant Art Spinella said AutoNation is considering just one strategy, which, if adopted, would mark a big change in the way auto retailers stock vehicles.
Mr. Spinella, VP at CNW Marketing/Research, said the chain is studying whether to "use a grocery-store mentality to sell cars."
The chain would stock its used vehicle inventory in four basic categories, he said: high-volume/low-profit; high-volume/high-profit; low-volume/low-profit; and low-volume/high-profit. Each category would represent a specific percentage of each lot's total inventory to maximize profits.
"No one's done this before in the car business," Mr. Spinella said, adding most car dealers concentrate almost exclusively on the highest-profit vehicles. "The way they're thinking of doing it, they'd have a certain amount of high-volume/low-profit cars-like a 12-pack of Coca-Cola for $1.99-to generate floor traffic."
AutoNation, the brainchild of entrepreneur Wayne Huizenga, has grown rapidly since opening its first store last October. It now has 14 stores in five states: Florida, Texas, Arizona, Nevada and Michigan. The plan is to open 10 more by yearend, and to have nearly 100 by 2000. Each "superstore" carries about 1,000 used vehicles.
AutoNation's newspaper campaign is designed to build awareness of the chain and dispel what it called misconceptions about buying used cars. Hill, Holliday, Connors, Cosmopulos, Boston, created 34 different executions. The introductory ad addresses four myths about buying a used car, said John Drury, senior VP-marketing At AutoNation.
Each remaining ad discusses a single benefit offered by the chain, including selection and financing. The ads also have a retail component, listing prices on certain used vehicles.
Ads will run through 1997 and possibly into next year if they are deemed to be working.
WOMEN ARE KEY TARGET
Women are a key target of the ads, Mr. Drury said, because research shows women influence the bulk of vehicle purchases.
"Everything about our stores has a strong appeal to females," Mr. Drury said.