When Marshall Chesrown joined the world's largest automotive retail chain last year, he saw room for improvement. Now he is making changes in Republic Industries' used-car business.
Chesrown is in charge of the 26 AutoNation used-car stores, a chain that is growing at the rate of one new store every two weeks. "I have been in seven cities in the last two days," he said from his car phone recently.The company is focusing growth this year on the San Francisco Bay area, Chicago, Philadelphia, Washington and Baltimore.
Republic, a publicly held conglomerate headed by Blockbuster Video founder Wayne Huizenga, has acquired nearly 300 new car dealerships in 18 months.
Under its "cluster" marketing concept, Republic also began building used-car AutoNation USA "mega-stores" in the top 50 U.S. markets where it owned franchised dealerships.
The idea behind Republic's new approach is to create national economies of scale for financing, insurance and inventory.
Chesrown, the first Colorado dealer to sell to Republic, was not happy with the way Republic carried out the intricate details of selling, reconditioning and distributing used cars. With centralized operations in Fort Lauderdale, Fla., Republic was trying to manage complex auto title transfers for all states from one location.
"To train someone how to handle one state's titles is difficult," Chesrown said. "Trying to teach people how to handle titles for 50 states is impossible."
AutoNation execs appeared unaware of regional preferences for certain brands. Subaru, a marginal seller in the South, is Colorado's fifth most popular model because of its all-wheel-drive traction in snow.
The company used the same standard for reconditioning a cheap Geo Metro as it did for a luxurious Lexus ES 300, a practice Chesrown saw as wasteful. Cars that did not sell at one store were often moved to another Republic dealership and offered at the same price in a type of "shell game."
During a Republic presentation on how to sell used cars, Chesrown walked out, associates recall.
"He said, `That might work where you come from, but it won't work in Denver,' " said Fred Emich, who heads Republic's Denver district.
"I wasn't critical of the concept," Chesrown said. "The concept was world-class. They were able to attract customers we were never able to attract before."
But the time it was taking to sell used cars under the centralized system was unacceptable, he said: "It's important that you turn them over. We kind of think it's like a supermarket where you have meat or vegetables, you have to sell them quickly."
Michael Maroone, president of Republic's automotive division, persuaded Chesrown to move from Denver to Republic's headquarters in December.
"I didn't want to leave Denver," Chesrown said. "When they first started talking to me about selling my stores, I didn't have any interest in merging with them. I was 39 years old, and I told them I wasn't ready to retire."
Maroone calls Chesrown "absolutely the best used-car retailer in the country."