AutoNation, Inc. (NYSE:AN) Q3 2023 Earnings Call Transcript

So as we think about the business in a balanced way, let’s just make sure we’re maximizing all the channels available to us, whilst you are making an acceptable total gross profit per unit sold. So I think we’re very clear with our teams that profit per unit is very, very important but we also recognize that it’s balanced.

John Murphy: And then just a second question on after sales and you may have gone into this, but the increased technician headcount. I was wondering if you can quantify that and how are you finding these techs? I mean it seems like everybody is finding, I mean hard time sourcing them. And is there more opportunity with whatever you’re doing there to increase the headcount or the tech count even more?

Mike Manley: I can’t give you — I would give you, if I could remember the exact increase, but it’s fairly significant in terms of the headcount. So let me, while I try and drag that number out of my memory, let me just tell you how is in it and what we’re doing. And the first thing is that as we go basically dealership by dealership to understand what the opportunity is, whether that is increased penetration in their vehicle park or whether it’s to improve customer service by reducing customer wait times. And I think once you’ve done that, you understand exactly what you’re looking for in terms of productive technicians. And then we have pulled together a group of our more senior service directors with our HR teams to put together what I think is a great campaign for attracting and recruiting technicians.

But you’re quite right, we have to be — in this area, we have to constantly make sure that our pay packages, our benefits are fully aligned, if not better than marketplace because you’re right, it’s an in-demand profession. And it’s not just about trying to hire more. It’s also about, as you know, keeping the ones that you’ve got. I’m going to say and Derek, you may have to circle back in [Technical Difficulty] from memory, I think we’ve added over.

Derek Fiebig: 14% same store.

Mike Manley: 14%, thank you for [Multiple Speakers]…

John Murphy: Okay. On that, I mean those stalls exist to put those people into. You’re not paying $150, $200,000 of CapEx. I mean, there’s room to — there’s capacity to put them in. So cap goes up. Is that a fair statement?

Mike Manley: Absolutely fair. By utilization it’s about 55% at the moment. So we — AutoNation has built some beautiful, beautiful dealerships. And apart of building dealerships is they put plenty of capacity in there, we are not sure capacity even in terms of value.

Operator: Our last question today comes from David Whiston from Morningstar.

David Whiston: You mentioned in the slide deck that you increased your tech headcount. I was just curious if you had to do any aggressive spending on compensation or advertising to make that happen?

Mike Manley: No, and as I mentioned before, we obviously check very regularly market-by-market pay and benefit packages to make sure that we are competitive with market. Like everybody else, like everybody else, we offer signing bonuses in the marketplace. And we also do a lot of work and there’s more we can do in this area, frankly, but we do a lot of work in terms of recognition, seniority, tenure and those things. But it’s something that we recognize it. As I said, it’s a very high demand, in-demand protection and we just work very hard as do others.

David Whiston: And I believe last quarter, you were talking about wanting to get more recurring business from your customers. Service would be a big part of that, of course, especially on the customer pay side. I’m just curious, how do you convince consumers who normally haven’t been considering using the dealer or service any more than they have to, to start doing so?