AutoNation expects to hit $500 mil in Net revenues

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Autonation expects its revenues generated by the Internet to hit $500 million this year.

The car chain always has had big plans for Internet marketing. But after its initial foray into cyberspace, AutoNation now has data reinforcing its commitment to online sales.

According to President John Costello, former senior exec VP-marketing at Sears, Roebuck & Co., AutoNation plans to make a major investment in online marketing as a result of that data.

He wouldn't speculate on how much of AutoNation's sales ultimately will be generated by the Internet, but sales leads from the Web produced more than 6,600 vehicle sales--and $150 million in revenue--for AutoNation during the first quarter of 1999. That's roughly 3.6% of the chain's new- and used-vehicle unit sales and 4% of revenue.

Besides the corporate Web site, the company is setting up sites for individual dealers.


Although those percentages are relatively small, AutoNation's internal research reveals the Internet's enormous potential for attracting customers.

In Denver, where AutoNation is testing a new brand-marketing campaign, 50% of AutoNation's customers wouldn't have visited stores without the Internet presence, and 35% said they wouldn't have bought from AutoNation if it didn't have a Web site.

The Denver branding campaign, which includes an Internet strategy, eventually will be rolled out nationwide.

AutoNation will use the Web sites to build traffic at its dealerships, said Mr. Costello. Few customers are ready to buy vehicles sight unseen, so there is still a need for a large network of dealerships.

"Dealerships remain central to our strategy," he said. "The Internet provides an opportunity to generate greater traffic and revenue. The physical dealership will play an important role in the sales and ownership experience."


Mr. Costello was known as a strong proponent of Internet marketing at Sears. And his experience with Sears convinced him the Internet should be used to drive in-store traffic, not replace retail outlets.

Some customers who gather research on the Internet still would rather come to a store to make a purchase, Mr. Costello said.

AutoNation has learned in Denver that the Internet can triple the size of a dealership's sales territory. Promoting a Web site can expand a dealership's sales territory to a 30-mile radius; typically, a car dealership draws 90% of its customers from within 10 miles.


To boost online sales, AutoNation is: Setting up Web sites for each of its dealerships in addition to its corporate site; subscribing to several online referral services; using proprietary software called Compass, which tracks Internet leads; dedicating one or two salespeople at each dealership to following Internet leads; giving online salespeople pagers that alert them to incoming Internet leads.

The marketer defines an Internet sale as any sale that comes from an online referral service or from its own Web sites.

AutoNation is the largest dealership group in the U.S., with 223 dealerships and $13.5 billion in revenue in 1998.

Although its stated goal is to dominate the car market using the Internet, that won't affect its aggressive plans to acquire more dealerships.

Ms. Harris is a staff reporter for Automotive News.

Copyright May 1999, Crain Communications Inc.

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