AutoNation 2006 Annual Report Download - page 4

Table of Contents
Our strategies are supported by our use of information technology. We use the Internet to develop and acquire customer leads and
referrals. By pursuing our strategies and leveraging information technology to enhance our customer relationships, we hope to convince
potential customers who live or work in our markets that an educated vehicle buying decision cannot be made without considering our
stores.
A key component of our strategy is to maximize the return on investment generated by the use of cash flow that our business
generates. We expect to use our cash flow to make capital investments in our current business, to complete strategic dealership
acquisitions and to repurchase our common stock pursuant to our Board-authorized share repurchase program. Our capital allocation
decisions will be based on such factors as the expected rate of return on our investment, the market price of our common stock, the
potential impact on our capital structure and our ability to complete strategic dealership acquisitions that meet our return on investment
target. We also divest non-core stores from time to time in order to improve our portfolio of stores and to generate sales proceeds that can be
reinvested at a higher expected rate of return.
Deliver a Positive Customer Experience
Our goal is to deliver a positive customer experience at our stores. Our efforts to improve our customers’ experience at our stores
include the following practices and initiatives in key areas of our business:
• Improving Customer Service: The success of our stores depends in significant part on our ability to deliver positive
experiences to our customers. We have developed and implemented standardized customer-friendly sales and service processes.
We believe these processes improve the sales and service experiences of our customers. We have developed and are implementing
across our stores a customer-friendly sales menu designed to provide clear disclosure of purchase or lease transaction terms. We
emphasize the importance of customer satisfaction to our key store personnel by basing a portion of their compensation on the
quality of customer service they provide in connection with vehicle sales and service.
• Increasing Parts and Service Sales: Our goal is that our customers will use us for all of their vehicle service needs. Our key
initiatives for our parts and service business are focused on optimizing our processes, pricing and promotion. We have
implemented across all of our stores standardized service processes and marketing communications, which are designed to
ensure that we offer our existing and potential customers the complete range of vehicle maintenance and repair services. We expect
our service processes and marketing communications to increase our customer-pay service and parts business. As a result of our
significant scale, we believe we can communicate frequently and effectively with our customers. Our efforts at optimizing our
pricing are directed toward maintaining competitive pricing for commonly performed vehicle services and repairs for like-brand
vehicles within each of our markets.
• Increasing Finance, Insurance and Other Aftermarket Product Sales: We continue to improve our finance and insurance
business by using our standardized best common processes across our store network. Our customers are presented with the
“AutoNation Pledge,” which provides clear disclosure relating to the finance and insurance sales process. We believe the pledge
improves our customers’ shopping experience for finance and insurance products at our stores. Additionally, our stores use our
customer-friendly finance and insurance menu, which is designed to ensure that we offer our customers the complete range of
finance, insurance, protection and other aftermarket products in a transparent manner. We offer our customers aftermarket
products such as extended warranty contracts, maintenance programs, theft deterrent systems and various insurance products at
competitive rates and prices. We also continue to focus on optimizing the mix of finance sources available for our customers’
convenience.
Leverage Our Significant Scale
We leverage our scale as the largest automotive retailer in the United States to further improve our cost structure by obtaining
significant cost savings in our business. The following practices and initiatives reflect our commitment to leveraging our scale and
managing cost:
• Managing New Vehicle Inventories: We manage our new vehicle inventories to optimize our stores’ supply and mix of vehicle
inventory. Through the use of our web-based planning and tracking system, in
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