Name: AutoNation CEO: 'Every one of our brands has more demand than supply'
Uploaded: 2022-02-23
Duration: 8 min 21 s
Description: New CEO Mike Manley says supplies will get better by end of 2022 and used car market is still hot.

New CEO Mike Manley says supplies will get better by end of 2022 and used car market is still hot.

AutoNation CEO: "Every one of our brands has more demand than supply"

Leadership

AutoNation CEO: "Our brands has more demand than supply"

mike, so nice to meet you and thank you for joining us, you became ceo of autonation only four months ago and it looks like things are going your way, you recently reported record sales and earnings. What's the story behind those big numbers? Well, firstly the story is a great team, you know, when you come into an organization and you're able to deliver those results in your first quarter, as you can imagine, it's how the team has pulled together, which is fantastic. And we came into the fourth quarter with some phenomenal momentum. Um, I think we made the most of the market and we made the most of all of the assets that we have. Well, do you see this momentum continuing well, you know, one of the things that unfortunately everybody has struggled with is being accurate in terms of the forecast of our supply chains from the O E M s, because as you know, still very much in the chip shortage for new vehicle production and what that's doing is creating a shortfall in terms of inventory levels on the dealership floor, which in turn has a knock on effect to use vehicles, So difficult to forecast the full year. What we think will happen is that supply will get better at the end of the second and into the third quarter, hopefully continuing to strengthen all the way through the fourth quarter, but you know, when we get covid cases in different parts of the world and we get additional shutdowns as a result of that, it's still very difficult to get an accurate forecast, but I think generally that's what people are expecting for this year, from your perspective, from what you can tell of what's going on in the marketplace, which brands are doing well and which ones are feeling the pinch. What I would say is that if you look at our inventory levels across all of our brands, every one of them now has more demand than supply at this moment in time because it's driving inventory levels down. But what's happened really is particularly the end of last year, which is relatively seasonal, is there's a focus on premium luxury brands and that's pretty normal for the end of the year. And I think most of the manufacturers obviously Prioritized their premium and luxury brands in their portfolio to make sure that they got the chips. And now traditionally as we get into spring it moves on to more of the utility vehicles, including pickups. Tell us about the used car market, your sales jumped 55% in the latest quarter. I mean, that's just huge. Uh, is this a long term trend or is this just a short term fix? Because people can't get the new cars that they want. You know, I think there's two things that drove that phenomenal increase in revenue, firstly, we have, as you know, seen used car prices increased basically all throughout the year. So we've seen price appreciation in used vehicles in a similar fashion as we've seen in new vehicles And our volume increased by 21% in the fourth quarter. So the combination of the price increases Plus the volume increase gave us that 55% jump. Now for us, there's not a flash in the pan, it really is a result of some really hard work to improve new and used ratios within our franchise business. But we've also been investing heavily in our alternation, us a platform which is dedicated used car businesses and we launched two additional alternation usa stores in the fourth quarter and very pleased to say they outperformed our expectations. So really, it was a combination of those things and it's a big focus for us as we come into this year to keep that moving forward, Let's talk a little bit about E V. S, it looks like consumers are really getting serious about owning an electric vehicle. How would you describe the pace of DVD sales? Well, obviously they've picked up fairly significantly over the last few years, but from a very low base, frankly, but what we are seeing is really a lot of early adopters, particularly in the high mid end in the premium segment coming into the marketplace. Now that's going to be followed next year by a significant number of additional launchers. So I'm expecting yet again, another big increase in 2022 who's winning the race mike. Well, you know, Tesla have a big head start in the, in the business. But if you look, for example at the premium brands with Mercedes and the launch of their EQ, you obviously have Porsche out there with Tyco and you have Audi out there as well. He under under this new vehicle is doing incredibly well and it's not just the vehicles that are in the marketplace, it's also the announcements that we've seen obviously forward with their Lightning have received significant numbers of pre orders. So I think what we're seeing is if it's a well known name plate, like the maquis, for example from Mustang or the Lightning F 1 50 or the tycoon from Porsche, all of those, all of those vehicles and brands are doing well, whether it's in the market today or it's just released for consumer orders. You mentioned Tesla, I mean, certainly it is a dominant force in the E. V market, not just because of its tech innovations, but also it's been a powerful force in the way people buy their cars. I mean, they are bypassing dealerships and they're going directly to the consumer. To what extent is this influencing the future of dealerships? Do you have to have some kind of paradigm shift at autonation? I'll agree with half of what you said. I mean, what they're actually doing is they have facilitated an online purchase that quite often also includes a visit to a dealership, the dealership just happens to be on my Tesla. So when you stand back really, what we need to make sure is that we provide the customers the best buy an experience that suits multiple generations and that for some is completely online fulfilled through e commerce with fulfillment at their place of home or their office, some is through the dealership. So regardless of the structure that's in place, what's really important is to provide those different types of portals, there's different types of access so that they can purchase a vehicle their way. And I think that's the important message. Well, what does that mean for the dealership world? Because as consumers do get comfortable doing an online purchase, uh, and having so many other choices. How does this put pressure on the traditional dealership network? I don't think it does. I think that the dealers and their european partners will make sure that a customer can have a very smooth digital journey through that combination of channel that works incredibly well and provides frankly a lot more opportunity and options to customers going forward. It's just another way of buying a vehicle. We'll look into the future mike as the new Ceo of Autonation. Where do you want to take it next? The company has been around For about 30 years. It's one of the biggest companies on the Fortune 500. How do you want people describing autonation a few years from now, but we are in a fantastic position. What you will find with us is historically, we have been incredible innovators and that will continue into the future Now, whether it's our digital platform, whether it's our geographical coverage, whether it's the processes that we put in place, how we train ourselves executives, how we provide charging stations in all of our facilities for our customers. So we're going to continue to be known as innovators. We're going to continue to build on our phenomenal brand. We're going to continue to put the customer center of all of the things that we do. And I just think that the future that we're entering into will include changes, there's no doubt it will mean that people have to go to market in different ways. But automation is incredibly well placed. Well, you've been in the auto industry for most of your career and you have dealt with all of the ups and downs in this industry. What does it take to be a leader? A successful leader in this time of so much change and disruption. First, you have to be tenacious, um you have to be able to pivot, you have to be able to inspire people and motivate people. You have to be able to bring groups of people together and make sure that the direction of travel isn't exactly the same direction and people are very clear on what we as an organization are trying to achieve and I think it's a combination of those things. I mean persistence is also incredibly important because sometimes you have to push through barriers, whether it's marketplace barriers or other barriers to make sure that your company and your employees continue to thrive. And our industry has been around over 110 years. So we are known for innovation. We are known for agility. But most importantly, what I think is true to a leader is that you have to live the values of the organization and what you want to stand for.