AutoNation Inc., the largest U.S. retailer of new cars and trucks, plans to rename its mass market brand franchises in the first half of this year after posting record profit for 2012.
The dealership group’s 210 non-luxury domestic and import franchises will use the AutoNation moniker beginning Friday in South Florida, Chief executive officer Mike Jackson said in an interview. The changes affect 80 percent of AutoNation’s franchises, giving them names such as AutoNation Chevrolet. Premium-brand stores such as those selling Bayerische Motoren Werke’s BMW brand aren’t included.
AutoNation will become the biggest dealership network to operate under one brand in an industry that pioneered the U.S. franchise system, beginning with General Motors Co.’s predecessor more than a century ago.
“This hasn’t been done before at this size and scale,” Mike Maroone, chief operating officer of Fort Lauderdale-based AutoNation, said Wednesday in a telephone interview. Jackson, 63, said his discussions with Maroone about a national brand strategy for AutoNation date back to their first meeting as he prepared to join the company in 1999.
AutoNation Thursday said fourth-quarter net income climbed to $83.2 million, or 67 cents a share, from $69.4 million a year earlier. Profit beat the 64-cent average estimate of 13 analysts surveyed by Bloomberg and boosted adjusted earnings per share to $2.54 for all of 2012, setting records for both the fourth quarter and full year.
U.S. auto dealerships last year benefited from a 13 percent increase in new light-vehicle sales, the biggest annual gain since 1984, according to researcher Autodata Corp. AutoNation’s new-vehicle retail sales outpaced that growth, rising 20 percent to 267,810.
AutoNation will boost its marketing spending by $18 million, or about 20 percent, in the first half of this year to inform customers about dealership name changes, Jackson said. For example, Maroone Chevrolet of Pembroke Pines will become AutoNation Chevrolet of Pembroke Pines.
AutoNation will maintain its footprint of primarily major metropolitan markets in the U.S. Sun Belt, stretching from California to Florida, Jackson said.
“We have no ambition to be a national brand,” he said. “There are parts of the country that we are not going into. Our concentration and focus will be strengthening our position for the markets that we’re in so that we’re the dominant brand.”
AutoNation’s strategy required signoff from manufacturers including GM, Ford Motor Co., Chrysler Group, Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.
The company began negotiations with the carmakers in mid- 2012 to get their approval for using its name to precede the 23 mass market brands that AutoNation sells, Jackson said. The move eventually will help the company save on marketing costs and help boost its digital presence, he said.
Revenue in the fourth quarter rose 13 percent to $4.17 billion, according to a company statement. AutoNation is forecasting industrywide U.S. vehicle sales to climb to the mid- 15 million-unit range in 2013, from 14.5 million last year.
“We’re in the early innings of this automotive recovery from a retail point of view,” Jackson said.
The service segment of the auto-retail industry, which Jackson calls the “foundation” of AutoNation’s business, hit a cyclical bottom in 2012 and will begin to recover for at least the next five years, he said.
Dealers primarily service vehicles that are less than five years old, and the population of those cars and trucks on U.S. roads has dropped since the industry bottomed at 10.4 million sold in 2009, the fewest in 27 years, according to Woodcliff Lake, New Jersey-based Autodata.
“All those vehicles aren’t out there in the marketplace operating, so there’s a lag,” Jackson said. “There are simply fewer vehicles and fewer customers with cars to fix. Now, you begin to rebuild the units in operation, so each year there will be more available for service than there was the year before.”