1. | AutoNation, Inc.
Financial Highlights
FINANCIAL HIGHLIGHTS
FOR YEARS ENDED DECEMBER 31,
THE
1998 1997 1996 1995 1994
(in millions, except per share data)
Revenue . . . . . . . . . . . . . . . . . . .. $ 16,118.2 $ 9,177.9 $ 5,633.1 $ 4,354.5 $ 3,312.9
Income (loss) from continuing
operations before extraordinary
charge. . . . . . . . . . . . . . . . . . .. 334.6 64.6 (51.0) .9 29.4
Net income (loss). . . . . . . . . . . . .. 499.5 439.7 (6.7) 34.6 57.6
Basic earnings (loss) per share:
Continuing operations. . . . . . . .. .74 .16 (.16) — .14
$ $ $ $ $
Discontinued operations. . . . . . .. .36 .93 .24 .13 .13
Extraordinary charge . . . . . . . . .. — — (.10) — —
Net income (loss). . . . . . . . . . . . 1.10 1.09 (.02) .13 .27
$ $ $ $ $
Diluted earnings (loss) per share:
Continuing operations. . . . . . . . . .71 .15 (.16) — .14
$ $ $ $ $
Discontinued operations. . . . . . . . .35 .87 .24 .13 .13
Extraordinary charge . . . . . . . . . . — — (.10) — —
Net income (loss). . . . . . . . . . . . 1.06 1.02 (.02) .13 .27
$ $ $ $ $
Total assets. . . . . . . . . . . . . . . . . . . $ 13,925.8 $ 10,196.2 $ 6,567.6 $ 5,208.1 $ 3,212.6
Revenue earning vehicle debt. . . . . 4,377.9 4,172.1 3,380.4 2,961.2 1,829.2
Long-term debt, net of
current maturities . . . . . . . . . . . . 555.9 306.6 325.3 251.1 165.1
Shareholders’ equity. . . . . . . . . . . . 5,424.2 3,484.3 1,419.9 789.0 427.4
See Notes 2, 4, 7, 11 and 12 of Notes to Consolidated Financial Statements for discussion of business combinations,
notes payable and long-term debt, shareholders’ equity, restructuring and other charges and discontinued operations and their
effect on comparability of year-to-year data.
1

2. A Letter
to Shareholders
Dear Fellow Shareholder: we are frustrated too.
Why? Because we
In less than three years,
believe our share price
AutoNation, Inc. has
deserves to be much
grown from a concept
higher given our out-
into the nation’s largest
standing results.
provider of automotive
retail and rental products What are we doing to
and services. By nearly improve our share price?
every measure, 1998 was First, we are working
Harrs W .Hudson
i H.W ayne Huize g
na S even R. Berrard
t
an outstanding year for hard to ensure that the
the Company. investment community
understands our business plan. Second,
effectively communicates our single-
Revenue increased 76 percent to
s
we are repurchasing shares of our stock
minded focus on the automotive retail
$16 billion
when we have appropriate opportunities.
and rental businesses.
Operating income increased 131 percent Last and most important, we are deliver-
s
Our goal now – as it has been every
to $535 million ing superior financial results.We believe
year since 1995 – is to create customers
that these efforts ultimately will be
Earnings per share grew 97 percent for life.We believe we are well on our
s
reflected in our share price.
to $.71 way toward achieving this goal.
To ensure that we are meeting our
You will also notice that we have Despite our successes, there is one
goals, we are dedicated to delivering
changed our name from Republic measure by which 1998 was not a good
solid performance in each of our lines
Industries, Inc. to AutoNation, Inc. year: our share price. As one analyst said,
of business.
We believe the AutoNation name more “The Company remains most impressive,
yet a most frustrating stock.” We agree –
2

3. | AutoNation, Inc.
Letter to Shareholders
In the AutoNation Retail Group, our will enable us to increase store-level of unifying our retail locations under a
initiatives for 1999 include: pre-tax operating margins while being single brand and a common one-price,
the low-price provider to customers. no-haggle selling process.
Strengthening our network of nearly 400
s
franchised dealerships. AutoNation owns Securing a leadership position in Expanding strong manufacturer relation-
s s
many of the finest franchised automotive e-commerce. We have created the founda- ships. We believe that AutoNation’s
dealerships in the nation.We will continue tion necessary to be at the forefront framework agreements and strong
to implement a wide range of profit- of automotive electronic commerce. relationships with automobile manufac-
building initiatives in the dealerships We sold more than $100 million worth turers provide a distinct competitive
while leveraging the synergies that are of vehicles via the Internet during the advantage. In addition to our joint
already in place. fourth quarter of 1998, and we expect venture with Ford Motor Company
sales via e-commerce to exceed $500 in Rochester, New York, we will
Increasing same-store sales. By provid-
s
million in 1999. seek to develop other initiatives with
ing greater value and enhancing the
key manufacturers.
customer experience, we will sell more Expanding customer-friendly practices.
s
vehicles and related products and In Denver, we converted all of our fran- Improving operations at AutoNation
s
services at our franchised dealerships chised dealerships into a single network USA megastores. While the megastores
and AutoNation USA megastores. branded “AutoNation USA.” To date, generate significant interest and
our “Mile-High Project” has proven it is attention, they represent less than
Expanding margins. Because of the
s
possible to change a century-old way of 10 percent of our total revenue. As with
economies of scale we enjoy in our key
doing business; customers have reacted any retail concept in the formative
markets, we can reduce the costs associated
enthusiastically to their purchase and ser- stages, the AutoNation USA megastore
with selling vehicles and providing ser-
vice experiences. Denver results rein- model must be refined in order to
vices to our customers. These economies
force our belief in a long-term strategy succeed. So far, consumer reaction to the
3

4. 2 Build these franchised
.
automotive dealerships into
a national retail network.
REDEFINE
3 Redefine the customer
1 Acquire the best .
.
experience by changing the
franchised automotive
BUILD
sales and service processes to
dealerships in the nation.
better serve customers’ needs.
ACQUIRE
AutoNation Growth Model
Our strategic model for building our automotivere a l b s n s
ti uies
flow a t re - t p p a .
ol s h e s e l n
megastores’ one-price, no-haggle selling locations.We’re confident these Leveraging the Global Odyssey
s
process has been very positive, but we actions will generate positive results Operating System. This state-of-the-art
need to generate greater profit per loca- in 1999 and beyond. system will help improve operating
tion.We are taking steps to accomplish margins through a more efficient
In the AutoNation Rental Group,
this by integrating megastore operations reservations system and better fleet
our initiatives for 1999 include:
into our existing district management utilization, enabling us to gain greater
structure to lower costs, leverage vehicle Consolidating business functions at our market share.The rollout of Global
s
inventories and achieve economies vehicle rental operations. We anticipate Odyssey at National Car Rental will
of scale.We are also adding franchised better operating results from the con- be followed by its introduction at
automotive dealerships to certain solidation of common administrative Alamo Rent-A-Car.
megastore locations.We believe the and back-lot functions at National Car
Building the National Car Rental,
s
sale and service of new vehicles will Rental and Alamo Rent-A-Car. Our
Alamo Rent-A-Car and CarTemps
stimulate increased traffic and drive goal is to have two strong vehicle rental
USA brands. Each of our three rental
incremental revenue at these megastore brands, supported by a single adminis-
brands has a distinct brand identity.
trative organization.
4

5. | AutoNation, Inc.
Letter to Shareholders
Attention will be focused on building We are building the first national auto- voted to sell all of the Company’s
brand awareness and loyalty with motive retail brand and strengthening remaining shares of Republic Services.
each company’s customer base through the recognition of our vehicle rental Proceeds from the sale will be reinvested
improved marketing and customer brands. As we do so, we believe investors in the Company’s core automotive
service initiatives. will recognize just how promising the retail and rental businesses and used to
prospects are for AutoNation, Inc. retire debt.
AutoNation’s management is dedicated
to making our Company the leader in One last point: despite the Company’s A great deal of hard work remains. But
the automotive retail, rental and service tireless efforts, the Internal Revenue we have assembled some of the most
businesses.We are planning for contin- Service decided not to rule on our respected and talented professionals in
ued growth during 1999 and are proposal to distribute the Company’s the automotive industry.We remain
focusing our resources and capabilities shares of Republic Services, Inc. to focused on our mission and goals and
on our core business units.The major shareholders of AutoNation, Inc. on a on building a successful customer-
initiatives cited above, and the many tax-free basis.Therefore, in March 1999, focused Company.We thank you, our
projects and tasks that support them, the Company’s Board of Directors shareholders and employees, for your
will help us achieve shareholder value continued support.
by “winning customers for life.”
H.Wayne Huizenga Steven R. Berrard Harris W. Hudson
Chairman and Co-Chief Executive Officer Vice Chairman
Co-Chief Executive Officer
March 31, 1999
5

6. John H. Costello
P sdn
re i e t
AutoNation, Ic.
n
J H. Costello leads the branding
ohn
e rt a AutoNation, Ic.
f st
fo n
6

7. | AutoNation, Inc.
The Importance of Brand
The Importance
of Brand
The name of our company has changed In simple terms, our brand is a promise The key to accomplishing this is to
from Republic Industries, Inc. to to our customers. It is a shorthand way attract, motivate and retain the best
AutoNation, Inc.We believe the of saying, “You know what to expect people in the automotive industry. A
AutoNation name more effectively when you do business with us.We stand powerful brand can serve this purpose.
communicates our single-minded focus. behind our products and services.”
Everyone at AutoNation, Inc. “owns”
Republic Industries competed in very We want consumers to know that the
the brand, and each of us knows that
attractive, but dissimilar, businesses – AutoNation brand stands for trust,
building a brand requires more than
solid waste, automotive retail and innovation, value and service. Our goal
advertising campaigns or exciting
automotive rental.With the pending is to put our customers first, whether they
promotions.The brand image is also
sale of our waste division, we are buy, rent or service a vehicle with us.
a reflection of how we answer the
focused solely on the opportunities in
We believe we have an outstanding telephone, handle customers’ service
the automotive retail and rental indus-
opportunity to build AutoNation into needs and greet them when they arrive
tries. Our new name reflects that focus.
a unique brand that connects strong at our showrooms or rental counters.
Of greater importance, our new name local entrepreneurs with a powerful In service centers, it’s about fixing
symbolizes our commitment to making national presence.This can provide their vehicles right the first time, every
“AutoNation” the pre-eminent brand real competitive leverage and lead to time. In rental, it’s getting customers
in automotive retail, rental and service. increased revenue, greater market share into the vehicles they want and quickly
Our goal is to achieve this status among and earnings growth. Our ownership on their way.
customers, employees and shareholders. of some of the leading franchised
Shareholders. A strong brand can make
We believe there are significant advan- automotive dealerships and vehicle
AutoNation an attractive investment.
tages in having a strong brand: rental companies gives us an excellent
Developing a strong brand position can
start.The next step is to build the
Customers. A strong brand can make lead to greater customer satisfaction,
AutoNation brand.
AutoNation a compelling first choice brand loyalty and customer retention.
for our customers when they are Employees. A strong brand can also These all lead to increased revenue,
considering purchasing a new or used help make AutoNation a preferred greater market share and earnings
vehicle or when their vehicle requires place to work. Although we sell, rent growth, which in turn impact share-
service. A strong corporate brand and service vehicles, we are essentially holder value. Our goal is to build
also supports our three strong vehicle a company committed to providing a shareholder value by creating customers
rental companies. superior experience for our customers. for life. AutoNation, Inc. represents our
commitment to build the next great
retail brand.
7

8. 8

9. | AutoNation, Inc.
AutoNation Retail Group
AutoNation
Retail Group
Acquire the best franchised automotive
AutoNation, Inc. has a well-defined, factors include high-pressure sales tactics,
dealerships. AutoNation has acquired
well-financed and well-managed plan difficulty in assessing a fair price and
many of the finest franchised automotive
to improve the operation of two of the inconsistent service experiences.We are
dealerships in some of the fastest-growing
most inefficient retail segments left in working to change this generations-old
markets in the United States. The objec-
the United States – the $310 billion new retail model.This will not happen
tive of our acquisition strategy is to be
vehicle segment and the $370 billion quickly and certainly will not be easy.
the leading automotive retailer in every
used vehicle segment of the auto- However, we believe consumers want
market in which we operate. Currently,
motive industry.We are convinced that change and that AutoNation is uniquely
we own dealerships in 28 markets.
Americans, who rank the process of pur- positioned to provide the best automo-
We will continue making acquisitions
chasing a vehicle near the bottom of tive buying and ownership experiences
in 1999, particularly in our existing
most surveys, will turn to retail locations in the industry.
markets.We are continuing to focus our
that eliminate the sales hassle, improve
THREE-STEP GROWTH MODEL
acquisition strategy on the preeminent
vehicle selection, provide value in the
Our strategic model for building our franchised automotive dealerships that
purchase and financing experiences and
automotive retail business follows a sell the most popular vehicle brands.
ensure high quality after-market service.
three-step model:
Build a retail network. In 1998, we
AutoNation is the largest retailer of
Acquire the best franchised automotive progressed to the second level of our
new and used vehicles in the nation. s
dealerships in the nation. strategic model – building a strong
Our AutoNation Retail Group revenue
retail network.We have organized our
increased by 107 percent to $12.7 billion
Build these franchised automotive
s
franchised automotive dealerships and
in 1998, during which we sold 530,000
dealerships into a national retail network.
AutoNation USA megastores into
new and used vehicles.
Redefine the customer experience by districts, and further organized market
s
Even though we are already the nation’s
changing the sales and service processes clusters within these districts. Our
largest automotive retailer, our share of
to better serve customers’ needs. 10 automotive retail districts are orga-
the total U.S. automotive retail market is
nized to leverage the strengths of our
In just over two years, we have worked
only about 1.5 percent. AutoNation is
franchised automotive dealerships and
to execute the plan successfully, believing
a relatively new company in a highly
AutoNation USA megastores.We are
that AutoNation’s resources and employee
fragmented industry. Our growth oppor-
now exploiting the combined resources
talent could accomplish what has not
tunity is huge.
of each district to reduce costs, become
been done previously in the industry.To
the low-price provider and build
Since automotive retail sales began
succeed, we plan to:
greater market share.The district struc-
some 100 years ago, the process has
ture leverages economies of scale in
often alienated customers. Contributing
advertising, inventory sharing, cross-selling
and a number of other retail functions.
9

10. A New
Concept in
Retail Sales
The launch of Denve’s“Mile-High Project” was
r
ah g p i t o 1 9 .
ih on f 98
The pro e t b
j c rought our 17 Denve r
franchised automotive dealerships together
under a single brand name:AutoNation USA.
The dealerships conve e t a o e p i e,
rt d o n - r c
n-agesligp
o h g l e l n rocess and implemented many
o the customer- r e d iiitves popularized
f f i n ly ntai
i o r AutoNation USA megastore.
nu s
At the same time,t e d a e s i s j i e
h elrhp ond
frc s t d l ve a p
o e o e i r owerful brand name adve i rts-
igmsaei ti g
n e s g n h s rowing marke The re u t ?
t. sls
AutoNation USA
“ We ve experienced a tremendous improvement
’
ia
n ware e s fo t e b a d a d a s g i a t
ns r h r n n i n fic n
i c a e i s l s a t e d a e s i s s s M ke
n re s n a e t h e l r h p ,” ay i
Maroone,P s d n o t e AutoNation Retail
re i e t f h
Group. “Customers are e t u i s i a o t t e
nhsatc bu h
AutoNation buying and ownership experience. ”
E g t we k a t r t e l u c o t e a ve i
ih e s f e h a n h f h d rt s-
ig 73 percent of consumers polled said they
n,
intended to shop at AutoNation when considering
ave i l p rchase.Asked to identify an automotive
hce u
r t i e i D nve
e a l r n e r,more than 40 percent named
AutoNation – re u t four times gre t r t a fo
sls ae hn r
a other automotivere a l r,i c u i g t o e who
ny tie n l d n h s
have been adve i i g i t e m r tfo ye r .
rt s n n h a ke r a s
“ Wer a x o s t s e t e e k n s o re u t
’ e n i u o e h s i d f sls
in other markes Maroone say.
t,” s
Michael E. Maroone
P sdn
re i e t
AutoNation Retail Group
10

11. AutoNation employe s t ke g a p i e i
e a re t r d n
p
resenting we l m i t i e , s o l s n ve i l s
l - a n a n d p t e s ew h c e
to our customers.
Jh E
o n lway (center) discusses the import n e o
ac f
customer satisfaction with two s l s a s c a e .
ae soits

12. | AutoNation, Inc.
AutoNation Retail Group
FRANCHISED AUTOMOTIVE DEALERSHIPS
Our districts are led by some of the In this highly competitive business, we
best retailers in the automotive industry – will succeed as the low-price provider –
During 1998, AutoNation acquired
entrepreneurs who joined AutoNation delivering every product and service our
181 franchised automotive dealerships,
to help lead the transformation of auto- customers require at the lowest possible
and since the beginning of 1999,
motive retail.The district structure price. Not only are we making the
we have acquired seven more.We
supports the franchised automotive purchase and service experiences more
now own over 380 franchised auto-
dealerships and AutoNation megastores customer focused, we are bringing
motive dealerships representing 39
and places the day-to-day decision value-added benefits to our customers.
manufacturer brands.
making authority in the local market,
Redefine the customer experience. In
For the year, we improved our store-level
close to the customer.
each of our districts, we are focused on
pre-tax operating margins to an industry-
The district structure also provides oppor- utilizing a network of stores to increase
leading 3.8 percent from 2.9 percent in
tunities for our franchised automotive revenue, build greater market share, grow
1997.We believe there are still tremen-
dealerships to share best practices.We are earnings and deliver superior customer
dous opportunities to further expand
also sharing people, vehicle and parts service. In our Denver district, we are also
pre-tax margins in 1999 and beyond.
inventories, service and collision assign- focused on the third part of the strategy –
Our dealers are excited about their roles
ments and administrative operations.We redefining the customer experience.
in the biggest opportunity in automotive
are increasing pre-tax operating margins Through initiatives such as the one-price,
retail – distinguishing AutoNation from
as a result. In fact, many of our dealers no-haggle, customer-focused network
competitors by redefining the sales, ser-
have pre-tax operating margins twice that of dealerships, AutoNation has changed
vice and ownership experiences.Together,
of the average dealer in the industry. forever the automotive retail experience
we have ambitious goals for maximizing
for customers in Denver.
our opportunities.
e-commerce
The Internet has become an integral part o t e ve i l b y n p c s for many
f h h c e u i g ro e s
consumers. A d j s a o r go l i t b t e l a i g a t m t vere a l r i o r
n ut s u a s o e h edn uooi tie n u
markes we a s i t n t b t e l a i g o - i e re a l r. meet that gol we h
t, l o n e d o e h e d n n l n t i e To a, ave
developed websites at each of our franchised automotive dealerships and we have
c a e a p p i t ry s s e t m n g I t r e l a s o a n t o a b s s Consumers
re t d ro r e a ytm o aae nent ed n ainl ai.
uigorstscne
s n u i e a xecute a compre e s ve e e t n c t a s c i n i c u i g i n-
h n i l c ro i r n a t o , n l d n nve
t ry s a n n , p i e,p m n c l u a i n , fin n i g a d d l ve s h d l n .
o c n i g r c ay e t a c l t o s a c n n e i ry c e u i g
AutoNation has developed an e-commerc s l s fo e o s e i l t a n d
e a e rc f p c a ly r i e
Internet Sales Consultants based at each of the Companys franchised automotive
’
d a e s i s a d AutoNation USA megastore.These consultants use “Compass,”a
elrhp n s
p p i t ry s f w re p
ro r e a o t a rogram, t t a k a d s rv c I t r e s l s l a s Compass
o r c n e ie nent ae ed.
c n a e a I t r e S l s C n u t n by p g r a s o a a i q i i re e ve.
a l rt n n e n t a e o s l a t a e s o n s n n u ry s c i d
Ta al
h t l ows rap d response times to e-commerc i q i i s U ni t e I t r e l a -
i e n u r e . lke h n e n t e d
g n r t r , we “ n t e l a f
eeaos ow ” h e d rom the moment the pro p c i b ye c i k o t
s e t ve u r l c s n o
o e o o r s t s until the moment a ve i l i p rc a e .
n f u ie hce s u h s d
L o i g forward AutoNation intends to introduce a series of e-commerc
okn , e
H. Scott Barre t
t
i n a i n a m d a keeping the Company i t e fo f n o t i e c t n
n ov t o s i e t n h rero t f h s x i i g
Sno Vc P sdn
e i r i e re i e t
r ti c a n l
eal h n e .
Iformation Technology
n
12

13. AUTONATION USA MEGASTORES
The Company opened nine AutoNation USA megastores during
1998 and acquired Driver’s Mart Worldwide, Inc., the franchisor of
eight Driver’s Mart used vehicle locations which were subsequently
rebranded AutoNation USA.The total number of megastores at the
end of 1998 was 42.Three more have been opened in 1999, bringing
the total to 45 megastores in 13 states.
AutoNation USA megastores’ 1998 revenue increased to $1.3 billion,
from $638 million in 1997. However, we are not pleased because
the megastores were only profitable during one quarter of 1998.
The megastore business concept is only a little over two years old.
From the very beginning we knew that to be successful in the long
Kevin P.W e t a l
sfl
run, the megastores would need to be continually refined, based on
P sdn
re i e t
changing marketplace conditions and research findings.That is what
AutoNation Financial Serv c s
ie
we have been doing and are continuing to do today.
We believe that the megastores will ultimately be a financial success.
AutoNation Financial Serv c s ( N S i t e
ie AF) s h
To that end, we are modifying the concept in order to generate higher
c tve finance companyo AutoNation, Ic.
api f n,
sales and service volumes and to increase earnings. At the same time,
and i d d c t d e c u i ly t p i i g finan-
s e i a e x l s ve o rov d n
we will preserve the retail experience customers have said they ca p
il roducts and services to customers of
prefer overwhelmingly. AutoNation’s franchised automotive d a e s i s
elrhp
and megastore. I 1 9 , isfirtfl ye r o
s n 9 8 t s ul a f
During 1999, a number of the megastore sites will be reconfigured
o e a i n , ANFS had nearly 62,000 customers
prtos
to add franchised automotive dealerships.We believe franchised adams $ blini mngdast.
n lot 1 ilo n aae ses
dealerships, selling new vehicles and providing service on some of The fin n i l s rvices segment is a major
aca e
the finest automotive real estate sites in the nation, will be successful. profit center in the automotive i d s ry
n u t .Ove r
75 percent of customers elect to finance their
The reconfiguration process will continue into 2000.
ve i l p rc a e a t e d a e s i
h c e u h s t h e l r h p.ANFS s g i i n fi-
In addition, we integrated the franchised dealerships and megastores c n ly enhances the Companys p
at ’ rofit b l t by
aiiy
in our retail districts and have made significant strides in adjusting r t i i g q a i y ve i l financing opport n t e
eann ult hce uiis
w t i AutoNation. ANFS also support t e
ihn sh
our inventory to the dynamics of today’s changing marketplace.We
ove a l m s i n o re a n n c s o e s fo lfe
rl iso f t i i g u t m r r i
are further coordinating the vehicle supply chain and consolidating
tro g i s i n ai fin n i g p
h u h t n ovtve a c n rograms.
the inventories of our franchised dealerships and megastores into a
The range of ANFS products includes
Financial Services
shared-sourcing operation. r ti a d l a e fin n i g secondary customer
eal n e s acn,
rfe a p
e rr l rograms, ve i l p
h c e rotection and
Other actions include ongoing standardization of store processes to
maintenance programs and insurance pro u t .
dcs
utilize best practices and additional training programs for store general
Hav n i s own in-house finance company al
ig t lows
managers and their management teams. AutoNation to maintain the quality and consis-
t n y o t e fin n i l p
ec f h a c a roducts and processes
ofe d i i s n t
f re n t e work of automotiverealr. ties
W t i s fo u e c u i ly o AutoNation
i h t c s x l s ve n
r t i e s ANFS concentrates its effo s o
ealr, rt n
improv n s rv c t rough technology t s a e
ig e ie h .I s t t -
o - h - rt e e t n c c d t ap l c t o s s e
f t e a l c ro i re i p i a i n y t m
al s re a l r t e e t n c l enter customer
low t i e s o l c ro i a ly
c d t ap l c t o s a d t re e veresponses in
re i p i a i n n o c i
minu e . ANFS is also expanding its serv c s t
ts ie o
i c u e I t r e a t r a i sfor customers.
n l d n e n t l e n t ve
13

14. | AutoNation, Inc.
AutoNation Retail Group
Skeptics may say these actions suggest and customer-friendly service demon- In addition to improvements in sales and
that the megastore concept does not strates that the AutoNation USA brand service volumes, we are also measuring
work.We disagree. Research shows is based on a powerful value proposition. our success in Denver by improving
that the concept has been embraced customer satisfaction scores. Improved
But the Mile-High Project is more
by customers. Once they experience customer satisfaction scores are a leading
than just a one-price, no-haggle sales
the benefits of one-price, no-haggle indicator that we are creating greater
process. Our Denver dealerships feature
shopping, the vast majority of customers customer loyalty.
common sales, service and operating
surveyed say they will return and buy
practices. Our dealers instituted identical Our Denver business model should
another vehicle from AutoNation USA.
vehicle guarantees, consistent service allow us to drive vehicle unit sales vol-
That’s why we developed the AutoNation processes, uniform pricing and hours ume and reduce our fixed costs, leading
USA megastores.We re-engineered the of operation, standardized training for to increased revenue, greater market
entire automotive sales process to put all employees, a consolidated customer share and earnings growth.
the customer in control.This process service call center and a consolidated
ROCHESTER AUTO COLLECTION
has to do with trust, innovation, value Internet site.We also coordinated all
During 1998, the Company formed a
and service.That’s the AutoNation USA dealership operations under a single
joint venture with Ford Motor Company
megastore way, and it’s not changing – district management structure.
to operate its Ford and Lincoln-Mercury
it’s expanding.
Other innovations include touch-screen
dealership network in Rochester, New
kiosks that allow customers to browse
MILE-HIGH PROJECT
York. Ford owns 51 percent of the joint
Denver-wide inventories, appraisals for
In Denver, our franchised automotive venture; AutoNation owns the remaining
trade-ins that are valid at all our Denver
dealerships set out to redefine the 49 percent.We oversee the management
locations, a menu-driven finance and
customer experience, the third step of of the retail operations of the joint
insurance selling system and a three-day,
our strategic model.The dealers took venture dealerships, which collectively
150-mile refund policy on all vehicles.
many of the customer-friendly innova- have been rebranded as the Rochester
tions that we piloted in our megastores Auto Collection.
Customers have reacted enthusiastically
and applied them to our franchised to Denver initiatives such as our launch
We are proud to be Ford’s partner in this
dealerships in Denver. of a “fix it fast or it’s free” guarantee on
endeavor.The Rochester Auto Collection
scheduled light maintenance and the
We launched the AutoNation USA retail provides AutoNation an opportunity to
offer of a guarantee on repair work for
brand in Denver in December 1998. showcase our capabilities and our retail
12 months or 12,000 miles.
At the same time, the sales and service model, which is based on providing a
processes of the 17 franchised dealerships positive customer experience. AutoNation
And by advertising under a single brand
were transformed, significantly enhanc- also has the opportunity to work with
name, we have developed significant
ing the customer experience. Ford to build a network of similarly
brand awareness of AutoNation USA in
franchised retailers in a single market, an
Denver.We are further developing our
To date, we have seen a substantial
experience which will also benefit the
brand through our Internet site which
increase in customer traffic and con-
Company in other markets.
had over 100,000 visitor sessions in its
sumer reaction has been very positive.
first two months of operation.The site
Our one-price, no-haggle sales process
provides consumers access to information
regarding the inventory of 3,500 vehicles
available at our Denver dealerships.
14

15. 15

16. | AutoNation, Inc.
AutoNation Rental Gro p
u
AutoNation
Rental Group
Automotive rental is a $24 billion The AutoNation Rental Group’s revenue EuroDollar was absorbed by National
global industry: $16 billion in the U.S. increased 13 percent to $3.5 billion in Car Rental, and Spirit Rent-A-Car and
and $8 billion internationally. In the 1998.The Group operated an average Snappy Car Rental were rebranded as
U.S., the business and leisure segments worldwide fleet of 330,000 vehicles, one CarTemps USA.
each represent 40 percent of the industry, of the largest in the industry.
The Company believes it now has a
with local/replacement making up the
AutoNation began competing in unique opportunity to achieve superior
remaining 20 percent.
the industry through its acquisitions returns with two of the strongest
AutoNation’s automotive rental busi- of National Car Rental and Alamo brands in the daily vehicle rental indus-
nesses serve both the daily rental and the Rent-A-Car.The Company further try and a strong competitor in the
local/replacement segments of the mar- strengthened its market position local/replacement industry. National Car
ketplace.The daily rental needs of both through subsequent acquisitions Rental is known for catering to the
business and leisure travelers are served of Value Rent-A-Car and Eurodollar needs of the business traveler, and Alamo
by the National Car Rental and Alamo Rent-A-Car. Rent-A-Car is recognized for offering
Rent-A-Car brands from a network the best value to the price-sensitive
The Company expanded into the
of on-airport and near-airport locations leisure customer. CarTemps USA is the
local/replacement segment with its
across the United States and the world. second-largest competitor in local/
acquisitions of Spirit Rent-A-Car and
The CarTemps USA brand serves the replacement rentals, the fastest-growing
Snappy Car Rental. Subsequently, Alamo
domestic local/replacement marketplace, vehicle rental industry segment.
Rent-A-Car absorbed the Value brand,
operating in nearly 400 locations
throughout the United States.
Global Odyssey System
The continu n i t g a i n o a m n s r t ve p
i g n e r t o f d i i t a i rocesses at National Car Rental and
Alamo Rent-A-Car will be enhanced by the implementation of common information
technology s s e s
y t m .The most signific n o t e e s s e s i t e AutoNation Rental
at f hs ytm s h
Gro p n
u ’s ew,s a e o - h - rt Global Odyssey S s e .
tt-ftea ytm
The Global Odyssey System is now operating at National Car Rental, and con-
ve s o h s b g n a Alamo Rent-A-Car,w t t e go l o f l i t g a i n by t e e d o
rin a eu t ih h a f ul nerto hnf
1999. Once Global Odyssey is the common platform for both brands, t e AutoNation
h
Rental Gro p c n l
u a everage technology t i p o m rove s n r i s i fleet management.
yege n
Accord n t B b B i g , P s d n o N t o a C r R n a , Global Odyssey a s
i g o o r g s re i e t f a i n l a e t l lo
contro s s c c re b s n s p c s e a re e a i n , r n a a d re u n p
l uh o u i e s ro e s s s s rv t o s e t l n t r rocesses
and fle t maintenance. system i a s d s g e t p
e The s l o e i n d o rovide more complete cus-
Robert L Briggs
.
t m r i formation than any o h r s s e i t e i d s ry
oe n te ytm n h nut .
P sdn
re i e t
National Car Rental
16

17. Serving the Leisure Traveler
Alamo Rent-A-Car commissioned a compre e s ve
hni
s u y o t e l i u t avel marke p a e i 1 9 t b t e
t d f h e s re r tlc n 98 o etr
understand the unique needs of the leisurere t r.Using
ne
t e s u y,
h t d Alamo Rent-A-Car examined how i c u dt ol
sre g h n i s l a e s i ro e i t e l i u t ave s g e t
t n t e t e d r h p l n h e s re r l e m n .
Accord n t K ren Beard P s d n o Alamo
ig o a , re i e t f
Rent-A-Car,key l c t o s w l b remodeled to better
oain il e
s rve t e l i u t ave e
e h e s re r l r.The ve i l m x av i a l w l
h c e i albe il
also be modifie t i c u e ve i l s t a l i u t ave e s
d o nld h c e h t e s re r l r
p fe
re r,such as conve ils minivans and sportuiiy
rtbe, tlt
ve i l s Changing rooms, c i d p ay a a, r s rooms
hce. h l l res e t
equipped with baby-changing stations and sundry s l s
ae
Karen L. Beard
sain wl b a e.
t t o s i l e dd d
P sdn
re i e t
Alamo Rent-A-Car
NATIONAL CAR RENTAL At the same time, we will reduce new offices, with approximately 100
AND
ALAMO RENT-A-CAR: TWO STRONG operating costs by having a single planned for 1999, including expanding
BRANDS/ONE ORGANIZATION overhead structure, a shared fleet and its presence within AutoNation’s franchised
common information technology. dealership and megastore network.
Within North America, the Company
intends to maximize the benefits of the CARTEMPS USA INTERNATIONAL
brand equity that both National Car
The CarTemps USA brand was launched The AutoNation Rental Group com-
Rental and Alamo Rent-A-Car enjoy,
in January 1998 by consolidating the petes in the international market under
while realizing significant economies of
former Spirit Rent-A-Car, Snappy Car both the National Car Rental and
scale through the consolidation of certain
Rental and the local/replacement divi- Alamo Rent-A-Car brands, with the
overlapping administrative and back-lot
sion of Alamo Rent-A-Car. Locations of majority of its overseas revenue generated
functions. In order to consolidate these
the three rental companies and adminis- in the United Kingdom. During 1998,
functions, the Company formed the
trative activities were consolidated. By the Company aggressively pursued the
North American Rental Group to man-
the end of 1998, CarTemps had opened consolidation of operations under the
age both companies.
62 additional new local/replacement common management of the Inter-
The North American Rental Group’s rental locations, bringing the total num- national Rental Group organization.
individual business units – National Car ber of CarTemps USA locations to 388 The International Group re-launched
Rental and Alamo Rent-A-Car – are in 40 states. the EuroDollar vehicle rental business
responsible for brand performance and under the National Car Rental brand,
CarTemps USA is a strong strategic
all activities directly affecting the customer integrated management of Alamo
growth vehicle for the AutoNation
and airport relations. Rent-A-Car and EuroDollar and
Rental Group. After less than two years
consolidated their vehicle fleets.
Because National Car Rental and of operation, CarTemps USA is already
Strategically, the international market
Alamo Rent-A-Car enjoy distinct brand a strong number two in the local/
should provide opportunities for
identities, a “two brands, supported by a replacement rental category and is
increased revenue and earnings growth
common organization” business strategy actively marketing itself as the logical
into the foreseeable future.
will be used to leverage the strengths alternative to the industry leader.
of each. CarTemps USA is aggressively opening
17

18. National Car Rental and Alamo Rent-A-Car buses J f reyJ Pa l
ef . rel
a in constant motion at airport a
re s round the
P sdn
re i e t
United States – and around the wo l – d l ve i g
rd ei rn
Nort American Rental Group
h
tave e s t a d f
r l r o n rom their re t l ve i l s
n a hce.
William E. Lobeck
P sdn
re i e t
CarTemps USA is building a netwo k o o fic s
r ffe
AutoNation Rental Group
nationwide to serve c s o e s i t e l c l
utmr n h oa/
replacement segment of the ve i l re t l i d s ry
hce n a n u t .
18

19. A New View
on Vehicle
Rental Services
AutoNation’s t re ve i l rental companies
h e hce
hg
ave rown ove t e p s ye r,a d t e r
r h at a n hi
brands h ave b e s rengthened to compete
en t
moreefe t ve y i t e r re p c i markes.
f c i l n h i s e t ve t
As AutoNation Rental Group Pre i e t
sdn
William E Lobeck planned fo f t re g t ,
. r u u row h
he determined that it wo l b v t l t s a
u d e i a o h re
resources and systems acro s t e b a d .
s h rns
To a s s i i p e e t n t i , Jfrey P re
s i t n m l m n i g h s ef all
was appointed Pre i e t o t e n ly
s d n f h ew formed
Nort American Rental Group in 1998.
h
Formerly P s d n o N t o a C r R n a ,
re i e t f a i n l a e t l
AutoNation Rental Group
P re l w s o e o t e d i i g fo
a l a n f h r v n rces behind
National Car Rental’s s c e s i re e t ye r .
ucs n c n as
Hsn msini t la teitgain
i ew i s o s o e d h n e r t o
e rt o t e National Car R n a a d Alamo
f sfh
fo etl n
Rent-A-Car brands.
Together,Lobeck, P re l a d t e e t re
a l n h ni
AutoNation Rental Group are b i d n
ulig
systems t a w l reduce the Gro p i s
ht il u ’s nvet-
mn i i
e t n nventory while maximizing reve e nu
a d ve i l u a e r t s I a i i n t e
n h c e s g a e . n dd t o , h
Group has made improve fleet management
d
a p i r t The Global Odyssey S s e w l
r o i y. ytm il
a s ic
l o n rease the Gro p p
u ’s rofitblt
aiiy.
S r t g c l ,Nort American markes
t a e i a ly h t
wl p
il rovide modest reve e gnu rowth into the
fre e a l f t re.B t when coupled with
o sebe uu u,
efic e c e re l z d t rough curr n a d f t re
f inis aie h et n uu
i t g a i n e fo
n e r t o f rts and benefit a h eve
s ci d
tro g t e u e o i c a i g s p i t c t d
h u h h s f n re s n ly o h s i a e
r nue management techniques, t e g
eve h rowth
o operating margins and profit s o l
f s hud
outpace reve e g t .
nu row h
Reve e a d e r i g g t i t e
nu n a n n s row h n h
AutoNation Rental Group will come prima-
r fo p i i g i c a e t a s c i n , t e
i r m r c n , n re s d r n a t o s h
ly
frt e penetration of CarTemps USA
u hr
i t t e l c l replacement marke a d
n o h oa/ tn
frt e expansion in international markes
u hr t.
19

20. Alamo Rent-A-Car serv c
ie
rp snai s a s s c s o e s
e re e t t ve s i t u t m r
t g t o t e r w a Ls
o e n h i ay t o
A g l s I t r a i n l Airport
nee nentoa .
An Internet Sales Consultant
asss a c s o e i u i g a
sit utmr n sn n
i - t re kiosk in Denve
nso r.
A fin n e a d i s r n e s e i l s
ac n nuac pcait
e p a n AutoNation Financial
xlis
S rv c s fin n i g o t o s t a
e ie’ a c n p i n o
customer at Gene Evans Fo ,
rd
Union City,GA.
a

21. Customers fo L fe | AutoNation, Inc.
ri
Customers for Life
AutoNation doesn’t claim to have To address these concerns, AutoNation customer relationship.We want the
started the change in automotive retail. is delivering a new proposition to the initial vehicle sale to be just the start
Over the past 20 years, that change has vehicle-buying public.We’re approaching of a relationship filled with many addi-
been influenced by many other retail automotive retail from the same premise tional transactions. Customer satisfaction
categories and the development of such that has proven to be successful in other and customer loyalty are the key com-
companies as WalMart, Home Depot, retail categories: treat customers fairly, ponents of this strategy.
Staples, Best Buy and Blockbuster.These give them good value and they will
Our customers for life philosophy is
companies all offer consumer-friendly return time and time again.
also part of the fabric of our automotive
shopping environments with large
There is an old retail adage – we have rental business. Repeat rentals happen
selections at value prices.
many customers, but we serve them only when the customer has been
But AutoNation is a pioneer in the auto- one at a time.We believe in that adage. treated properly and feels that he or
motive retail category.We believe automotive A little over two years ago, we launched she is valued.
retail must respond to the idea that the an automotive retail business based
What are the potential benefits
customers’ needs come first. on the concept that customers should
for AutoNation of our customers
be treated the way we would like to be
The automotive retail segment is ripe for life philosophy?
treated.We applied this concept to auto-
for change.The market is highly
motive retail and rental. And in just over Greater market share
s
fragmented and there is no national
two years, we can count more than two
automotive retail brand. Increased revenue
s
million customers who have purchased
What AutoNation is setting in motion or rented vehicles from us. Earnings growth
s
is no less than a shift in the balance
When you listen to customers, and Improved customer satisfaction
s
of power in favor of the consumer.
when you look at the business through and retention
Research indicates that consumers
the customers’ eyes, you naturally think
definitely believe the automotive retail Lower customer acquisition costs
s
about how it feels to buy the product ...
experience can and must improve:
not how to sell it. AutoNation is working Increased customer referral
s
Most consumers dislike negotiating to improve the image of the automotive opportunities
s
the price of a vehicle. retail business, selling more vehicles,
AutoNation is dedicated to the
generating more revenue and creating
The majority of those who buy from premise that it’s better to build a
s
customers for life as we put more
franchised automotive dealerships customer for a lifetime than it is
emphasis on the buying and ownership
never return to the dealership for to sell to a customer one time.
experiences and less on the selling expe-
service or any other reason.
rience.The bottom line is that customers We will succeed by staying focused
Many consumers still buy used vehicles don’t want to be sold.They want help on this premise.
s
through the classified ads rather than to buy what they need.
from dealerships.
At traditional dealerships, the objective
is to “close the sale.” At AutoNation,
our objective is to develop a lifelong
21

22. 23 39 40 41 43 67
42
Management’s Consolidated Consolidated Consolidated Notes to Report of Independent
Consolidated
Discussion and Balance Sheets Statements of Statements of Consolidated Certfie P b i
i d ulc
Statements of
Analyi
ss Operations Sa hles Eut
h re o d r ’ q i y FnnilSaeet
iaca ttmns Accountants
Cash Flows
1998 Financial
Review
22