AutoNation Signs a Deal with Waymo

AutoNation has signed a multi-year deal with Google's self driving car affiliate, Waymo.

In a multi-year service agreement, AutoNation Inc partnered with Google’s self-driving car affiliate Waymo, putting it among those that will provide service to autonomous vehicles.

AutoNation’s franchise stores, AutoNation USA stores and other AutoNation locations are set to provide vehicle maintenance and repairs for Waymo’s fleet of self-driving Chrysler Pacifica hybrids.

“We are excited to partner with Waymo, who is a leader of self-driving technology,” said Mike Jackson, who is the chairman, chief executive officer, and president of AutoNation. “AutoNation and Waymo are like-minded in our joint mission to keep people safe whenever they are in a vehicle.”

Additionally, America’s largest automotive dealer said in a press release that it is “uniquely positioned to work with Waymo as it expands its operations,” adding that it will offer complex mechanical and cosmetic repairs to maintain Waymo’s self-driving fleet.

AutoNation has pledged to provide “strategic capabilities to maximize the self-driving vehicle fleet across the United States.”

The deal states that AutoNation will firstly work with Waymo’s autonomous vehicle program in markets in Phoenix and northern California.

Figures

After releasing this news, AutoNation shares soared 14.8 percent, closing at $54.62. 

The announcement of the tie up was also accompanied by a better-than expected third quarter profit, showing that the company has performed well in spite of the hurricanes in the quarter.

The company said that hurricane Irma had a negative impact on its aftertax earnings by 8 cents per share.

Net income from continuing operations slipped to $97.6 million or $1.00 per share in the quarter that ended on September 30, from $107.8 million or $1.05 per share a year earlier.

However, total revenue dropped 2.4 percent to $5.43 billion.

As for a longer term outlook, fully automated vehicles are anticipated to smash the market in a limited form around 2020, with the vehicles being in fleets instead of being individually owned. That set up is expected to go on at least until the price of the necessary technology to manufacture the vehicles become more affordable for consumers.

Self-driving Vehicle Race

Many car-manufacturing companies have been targeting the perfection of autonomous vehicles.

Meanwhile, this tie up is not the first among the companies who are betting to win the race to the perfection of self-driving vehicles.

For instance, both General Motors Co and its rival, Ford Motor Co, have indicated that they plan to sell fully autonomous vehicles by 2021.

AutoNation said that it would expand along with Waymo, while the latter adds more brands.

“The ambition is to grow with Waymo,” said Jackson. “The only way to get a return on a truly autonomous system is on a shared vehicle, where there is an extended life cycle.” He added that that would require service through the manufacturer’s warranty period and beyond.

Fiat Chrysler Automobiles NV is also another part of the tie up with Waymo in developing self-driving cars based on a test fleet of Chrysler Pacifica.

Back in June, Waymo also closed a multi-year agreement with Avis Budget Group Inc. The deal was for the management of its growing autonomous vehicle fleet.

Jackson said that although he was open to acquisitions, he was not necessarily in search of new car dealerships.

“We are focused on building on USA used-vehicle stores. We are expanding our collision business,” he said.

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