AutoNation 2000 Annual Report Download - page 4

operating efficiency, including by managing costs of our
business and improving the utilization of our assets.
o Effectively use our free cash flow to reinvest in our business
through capital investments, strategic dealership acquisitions
and share repurchases.
o Continue to grow and leverage our e-commerce business.
Expand Our Margins
While new vehicle sales will continue to be a significant component of our
operations, we intend to continue to focus on developing the areas of our
automotive retail business that produce the highest margins. In general, parts
and service sales, used vehicle sales and sales of finance, insurance and other
aftermarket products yield relatively high margins as a percentage of sales
compared to new vehicle sales. We intend to emphasize higher-margin areas of
our business with the following strategic initiatives:
(arrow) PARTS AND SERVICE SALES AND COLLISION REPAIR SERVICES:
Almost all of our dealerships have service facilities that provide a
wide range of vehicle maintenance and repair services. Additionally, we
operate collision repair centers in most of our key markets. We intend
to increase our parts and service sales by, among other things: (1)
continuing to implement our team-based service process in our service
facilities (Advanced Production Structure) and our cycle time solution
in our collision centers, (2) implementing comprehensive parts and
service marketing programs within our local markets, (3) assuring that
our dealerships' parts requirements are fulfilled through purchases
from AutoNation dealerships to the extent practicable and (4)
developing relationships with national insurance companies that
establish our dealerships and collision centers as preferred providers
of collision repair services. Accordingly, we also intend to focus on
hiring, training and retaining technicians so that we can improve our
service bay utilization and increase our parts and service sales
without the need for additional capital investment.
(arrow) USED VEHICLE SALES: Each of our dealerships offers a variety
of brand name used vehicles. We will continue to leverage our status as
the largest retailer of new vehicles in the United States to develop
competitive advantages over our principal used vehicle competitors and
to expand our used vehicle business. We believe that, with our
significant scale in our key markets, we have better access than many
of our competitors to desirable used vehicle
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inventory. We intend to leverage our significant scale in our key
markets to improve our used vehicle business by (1) completing the
implementation at our dealerships of our advanced inventory management
system, which will permit us to source and manage used vehicle
inventories across our dealerships within a local market, (2)
implementing comprehensive used vehicle marketing programs within our
local markets, (3) dedicating specific management personnel in each of
our geographic operating districts to optimize our used vehicle
operations and (4) adopting standardized used vehicle operating
policies at our dealerships based on our dealerships' "best practices."
(arrow) FINANCE, INSURANCE AND OTHER AFTERMARKET PRODUCT SALES: Each
new or used vehicle sale presents our dealerships with the opportunity
to finance the vehicle, sell an extended service contract or other
finance and insurance product, and sell other aftermarket products,
such as vehicle accessories or a theft deterrent system. In order to
improve our finance and insurance business, we plan to (1) focus on
improving the performance of our dealerships that under-perform our