AutoNation, Lithia Leadership Still Have a Thing or Two To Learn

Automotive News had interviews yesterday morning with AutoNation's (AN) CEO (Mike Jackson) and Lithia's (LAD) CEO (Sid DeBoer). Mr. DeBoer said he is not interested in buying Chysler stores because he doesn't know what is going to happen with the brand (since it appears to be up for sale). I can symphathize, but I really wish Mr. DeBoer (and this extends to ALL management teams in the space so Mr. DeBoer should not be singled out) would simply refrain from commenting to the media about specific manufacturer relationships. It just seems like all downside risk and no upside when a public auto retailer management member comments to the media about a specific manufacturer.

Let's practice. Say it out loud with me. What do you think about Ford? Management member: "no comment." What about Chrysler? "No comment." What about GM? "No comment." Now add: "But as you know, we have said publicly that we intend to improve our portfolio/mix by buying more luxury and import stores." I'm even ok if you add something like: "now within the domestics there are some great brands like Cadillac or Chevrolet that we wouldn't mind owning more of."

But publicly commenting about problems with the automakers just seems like bad news. This should not mean you are required to hold hands and go skipping down the street together. The friction between manufacturer and distributor is inherent and healthy (as I have discussed before). But auto retail management teams need to focus on being a resource center (helping the automaker better understand the issues) rather than bringing "battles" out into the press.

AutoNation's CEO actually provided a well articulated interview in AutoNews about a more customer centric model that is needed in the auto industry. And it was really not adversarial. But actions speak louder than words. AutoNation's management has always had a well articulated strategy. The problem, however, I think is that when it comes to action, they have not treated stakeholders (manufacturers, investment resource centers like me, and employees) very well. I sense they are trying to change, and I hope the best for them.

And speaking of bringing "battles" out in the public. I should point out that I spent over six months begging management (in private) to change their stakeholder unfriendly ways. Only to discover (at least from my contacts) the way they were treating me was merely a symptom of their overall attitude towards a lot of stakeholders. And at that point, I felt I owed it to investors (who are allocating society's resources to this company) to inform them of my concerns.

How many investment dollars, and even productive jobs could have been spared in the late 1990s if analysts had only the courage to speak out against the existing management teams and call for a change? This is why I continue to call for leadership change at AutoNation. They need a change in the culture, and I think that becomes VERY difficult under the existing team.