Auto Nation Inc., the used-car supermarket owned by Wayne Huizenga's Republic Industries, is launching a captive finance company.
Republic formed Auto Nation Finance Co. "a couple weeks ago" and has begun assembling a staff, Michael Karsner, chief financial officer of the Fort Lauderdale, Fla.-based company, said in a telephone interview.
He declined to say when the company will begin funding loans, saying only, "It's in its infant stages. We're not in the position at this point to take any paper." He also refused to identify the new hires-a chief executive and several financial and marketing executives-because they haven't started work.
Even so, the start-up is being watched closely by mainstream automobile lenders, who say growing competition from Auto Nation and other car supermarkets is swiftly reshaping their business.
"There will be continued margin pressures as the superstores get in the finance business," said Timothy R. Maczka, senior vice president of Old Kent Bank and Trust Co., Grand Rapids, Mich.
Mr. Maczka also noted that though just 3% of sales are conducted through car marts in most of the nation, 40% of sales in California are conducted this way. He spoke on a panel at an auto finance conference sponsored in San Diego last week by the Consumer Bankers Association.
The launch of Auto Nation Finance Co. was much discussed at the conference, where it was mentioned in a speech by a Republic vice president, Mark Thimmig.
Mr. Thimmig said the finance company will concentrate on selling its wares through the 13 used-car "megastores" that Auto Nation will operate by yearend. By the end of the decade, the company expects to have 86 Auto Nation USA megastores spread across 50 large markets, each aiming to sell 8,000 to 8,400 "units"-cars and light trucks-per year.
Auto Nation's pitch is that it offers consumers a no-hassle, no-haggle way to buy a used car. Republic is building the company by buying up the largest and best-run dealerships in major markets, Mr. Thimmig said.
He insisted the company has no plans to cut these dealerships' ties with their established lenders. "There is a big industry available for all of us. We will continue to work closely with banks and captive finance companies as they bring out superior products."
