AutoNation trims top exec ranks, launches $50M restructuring plan

Four top AutoNation Inc. executives — including its COO — are departing amid a $50 million restructuring as the nation's largest new-vehicle retailer continues its search for a successor to CEO Mike Jackson.

The cost-cutting plan also will consolidate AutoNation's three regions into two and is in part prompted by the prospects of a "challenging" 2019 expected for the automotive retail business, the company said in a statement late Monday.

Among the departures are Lance Iserman, who was appointed COO in May 2017, and Tom Conophy, who became chief technology officer in November 2016. Both Iserman, 53, and Conophy left the company Monday. Donna Parlapiano, 54, retired Jan. 3 as executive vice president of franchise network, merger and acquisitions and corporate real estate. Dennis Berger, chief human resource officer, will leave the company Jan. 31 after assisting with the restructuring plan, the statement said.

"We believe automotive retail will be challenging in 2019," Jackson said in a statement Monday. He positioned AutoNation's move as one that would improve performance and make the dealership group more agile and efficient. "These actions will better position us for a changing market."

AutoNation will not replace the executives, Chief Marketing Officer Marc Cannon told Automotive News, but the company has promoted Jim Bender, former eastern region president, to executive vice president of sales, effective Monday. Bender has been with AutoNation for more than two decades, most recently overseeing the retailer's largest region with nearly 100 dealerships and about $8 billion in revenue in 2017.

"Jim is an exceptional and respected leader, with tremendous success," said Jackson. "He will lead all aspects of the variable sales operations."

In September, AutoNation launched a search for a new CEO after announcing that Jackson, who has been AutoNation's chief executive since 1999, would move to a new role as executive chairman in 2019.

Michael Larson, the director who was leading the effort to find a replacement for Jackson, abruptly stepped down last month. Larson was the company's lead independent director and is chief investment officer for Bill Gates, co-founder of Microsoft. Gates, through various investment entities, became AutoNation's largest shareholder in early 2016. He holds a 23 percent stake in the retailer.

The cost-cutting initiative eliminates AutoNation's central region. Texas and Colorado are now part of the company's western region, and Illinois and Minneapolis are part of the eastern region, Cannon said. The company also cut corporate and regional jobs as part of the central region consolidation, he said, but did not disclose the number of jobs reduced overall.

The cuts will help enable AutoNation to further invest in its brand extension strategy and digital efforts, the company said in the statement.

The brand extension strategy — designed to keep the company profitable amid tightening new-vehicle margins — includes AutoNation auctions, standalone used-vehicle stores and collision centers and branded finance-and-insurance products, parts and accessories.

Through the first nine months of 2018, as new-vehicle margins slid and the company’s stock price dropped, AutoNation’s revenue inched up 1 percent from the year earlier to $16 billion, and net income rose 7.1 percent to $303 million.

AutoNation, of Fort Lauderdale, Fla., ranks No. 1 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 329,116 new vehicles in 2017.

The company's stock price closed at $37.66 on Monday, up slightly from a month earlier, but down nearly $20 from Jan. 8, 2018.