AutoNation 2000 Annual Report Download - page 7

theft deterrent systems. 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.
Each of our dealerships acquires new vehicles for retail sale directly
from the applicable automotive manufacturer or distributor. Accordingly, we
depend in large part on the automotive manufacturers and distributors to
provide us with high quality vehicles that consumers desire and to supply us
with such vehicles at suitable locations, quantities and prices. We generally
acquire used vehicles from customer trade-ins, off-lease programs and, to a
lesser extent, auctions and other sources. We recondition used vehicles
acquired for retail sale at our dealerships' service facilities.
We provide financial products and services to our customers through third
parties, including the vehicle manufacturers' and distributors' captive finance
companies, as well as our automotive finance arm, AutoNation Financial
Services. AutoNation Financial Services' products include retail installment
loan financing, extended service contracts, vehicle protection and maintenance
programs and insurance products.
SALES AND MARKETING
In 2000, we retailed approximately 744,000 vehicles through our
dealerships. We sell a broad range of well-known vehicle makes within each of
our key markets.
Our marketing efforts focus on mass marketing in our local markets and are
designed to build our business with a broad base of repeat and new customers.
We engage in mass marketing and advertising primarily through newspapers,
radio, outdoor billboards, television and the Internet in our local markets. As
we have consolidated our dealership operations in certain of our key markets
under one local brand name, we have been able to focus our efforts on building
consumer awareness of the selected local brand name rather than on the
individual legacy names under which our dealerships operated prior to their
acquisition by us. We also have begun to develop newspaper, television and
radio advertising campaigns that we can modify for use in multiple local
markets, which we expect to result in advertising cost savings and efficiencies
that are not generally available to smaller retailers. We expect to continue to
realize cost savings and efficiencies with respect to advertising expenses, due
to our ability to obtain
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efficiencies in developing advertising campaigns and due to our ability to gain
volume discounts and other concessions as we increase our presence within our
key markets and consolidate our dealerships under a single brand name in our
local markets.
We market our vehicle inventory via the Internet through AutoNation.com,
our dealership websites and a site co-branded with America Online. We also have
entered into lead referral agreements pursuant to which we purchase customer
leads generated by various third-party websites, including Microsoft's MSN
Carpoint, and other sources. We provide these customer leads to our dealerships
for fulfillment to the extent possible. During 2000, we entered into lead
referral agreements with over 1,600 franchises operating from more than 1,000
independent dealerships by which we sell customer leads that we cannot fulfill
within our dealership network.
AGREEMENTS WITH VEHICLE MANUFACTURERS
We have entered into framework agreements with most major vehicle
manufacturers and distributors. These agreements contain provisions relating to
our management, operation, advertising and marketing, acquisition and ownership