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AutoNation (AN) Set to Spur Digital Game With Stake in TrueCar

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In an effort to venture into the domain of digital tools, AutoNation Inc. (AN - Free Report) recently announced that it has acquired a minority ownership stake of 6.1% in TrueCar, an automotive digital marketplace.

The acquisition will allow the companies to develop new ways to improve the buying and selling of vehicles.

TrueCar’s leading position in the digital space makes it well-suited to provide personal transportation solutions, with the central focus being on customer needs. This makes TrueCar a preferred choice for AutoNation. The decision to invest in TrueCar is a testimony to AutoNation’s strong commitment to providing its customers with a premium experience and bringing emerging technologies to uplift the digital buying experience. Through TrueCar, the end-to-end purchase process will be transparent and efficient for consumers.

TrueCar lets auto buyers and sellers connect and interact with its national network of certified dealers. Equipped with a vast inventory, TrueCar seeks to build one of the most personalized and efficient auto shopping experiences with a suite of vehicle discovery tools, price ratings and details of new, used and certified pre-owned vehicles. Moreover, TrueCar powers auto-buying programs for more than 250 leading brands.

Digital automotive platforms are rapidly gathering steam and emerging as a very sought-after medium of purchase. AutoNation is focused on tapping into this huge pool of opportunities bolstering its prospects, and boosting profitability and market presence. Initiatives like ship-to-home next day, curb-side pick-up option, and buy online, pick-up in stores options are gathering pace, driving additional traffic to the company’s online site.

Omni-channel marketing remains a key component of the company’s long-term strategy and is likely to boost revenues in the future. With the launch of its digital platform AutoNation Express— which enables customers to buy and sell vehicles online, providing them with a truly comprehensive and personal experience — the company has stepped up its digitization game. In the recently reported quarter, AutoNation stated that more than 50% of its unit sales were generated from its digital channels.

Shares of AN have lost 0.5% in a year compared with the industry’s 4.3% decline.

Zacks Investment Research
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Zacks Rank & Key Picks

AN currently has a Zacks Rank #3 (Hold).

Here are some better-ranked players in the auto space – (PRTS - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Allison Transmission Holdings (ALSN - Free Report) and Genuine Parts Company (GPC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

CarParts has an expected earnings growth rate of 85% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 72.7% upward over the past 30 days.

Allison has an expected earnings growth rate of 26.1% for the current year. The Zacks Consensus Estimate for ALSN’s current-year earnings has been revised 3.8% upward in the past 30 days.

Genuine Parts has an expected earnings growth rate of 18.1% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 2.5% upward over the past 30 days.

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