WAYNE’S NEW WORLD

Question: why would a guy worth $2 billion give a hoot about the sticker prices on most new cars? Answer: By chopping them down a notch, maybe he can make $2 billion more.

Meet H. Wayne Huizenga, billionaire entrepreneur extraordinaire. No introduction is needed, really. Huizenga hauled away your trash twice a week in the 1970s, treated you to a cheap date with video rentals in the 1980s and sated your craving for first downs, slap shots and strikeouts as a sports tycoon in the 1990s. It isn’t possible to be a conscious adult and not have contributed to the Huizenga stash in some small way. Now the man who built what has become waste-giant WMX Technologies, video-king Blockbuster Entertainment and perhaps the biggest collection of sports properties anywhere (Miami Dolphins, Florida Panthers, Florida Marlins) wants you to make another contribution. And–gulp–this time he’s thinking big.

These days Huizenga operates as chairman of a company called Republic Industries. (He sold Blockbuster to Viacom for $8.4 billion in September 1994.) And his latest scheme promises to rock the very core of the car world, which is worth $1 trillion when viewed as a series of transactions that includes new- and used-car sales, service, accessories and financing. Car businesses compose one-seventh of the economy.

Huizenga wants to institutionalize the no-haggle car purchase, spruce up car lots, give unhappy buyers full refunds, offer used-car buyers decent warranties and generally make the car-buying experience easier to stomach. These are not new ideas, but Huizenga plans to carry them out on a scale that would literally transform every aspect of car retailing. This is a glimpse of Wayne’s Auto World, where the same formula that has revolutionized video and trash will be put to work on wheels.

The driver of Huizenga’s new plan is a chain of used-car superstores under the name AutoNation USA. In the next few weeks Republic will complete its purchase of AutoNation and be free to pursue Huizenga’s aggressive strategy. Republic is a diversified company with interests in security systems, waste removal and autos. The last, once the company acquires AutoNation, is where it expects to get most of its growth. Investors are hitching a ride. Since Huizenga took over in May 1995, Republic stock has rocketed from less than $2 to more than $30, making Wayne $750 million richer on paper.

It’s widely known that Huizenga, 58, expects to increase AutoNation’s current seven used-car lots to about 100 sprinkled around the U.S. by the turn of the century. What isn’t widely appreciated, though, is how he hopes the used-car superstores–each planned to have 1,000 or more cars in stock, and each generating $100 million in annual revenue–will fit into his ultimate scheme. In Wayne’s world, you never get attached to cars. You trade them every couple of years until they’re scrap–and every stop along the way, he gets a piece of the action.

It all starts, naturally, with mint cars from the factory floor. And that is the piece to this giant puzzle that Huizenga and his brain trust at Republic are working on feverishly today. Huizenga, who built his trash and video empires via rapid acquisitions, will spend about $250 million next year to build used-car megalots from the ground up. But to complement that investment, he’s about to embark on a takeover spree of new-car dealerships.

Ordinarily, the whiff of rapid consolidation in any industry would set investors’ hearts aflutter with the thought of dozens of companies being taken over at premium prices. Unfortunately, in this case there are only a handful of publicly traded new-car dealerships, and AutoNation CEO Steve Berrard says flatly, “We have no interest in the ones out there.” He’ll be buying from private owners. So if you want to invest, your best shot is doing it through the consolidator, Republic. That’s what has driven Republic’s stock so far so fast. The stock is now exorbitantly expensive by traditional measures, but there is no traditional measure for the value of Wayne’s brain. If Huizenga manages to build another blockbuster business, in five years today’s price may look downright cheap.

The size and scope of Huizenga’s new-car dealership binge isn’t clear. Berrard denies there will be any full-blown buying spree. Says Huizenga: “It depends on what’s available.” But remember, this is a team that when building Blockbuster rode into town on its reputation and gave the best video stores an ultimatum: Sell to us or compete with us. Today’s new-car dealers have deeper pockets and are better entrenched. So Huizenga doesn’t want to put them on too much notice.

There’s no reason to believe he would go after this market in anything but a big way. Analyst Gary Balter at Donaldson Lufkin & Jenrette figures the goal is to own one of each of the eight major car franchises–Chevrolet, Ford, Chrysler, Pontiac, Dodge, Toyota, Nissan and Honda–in each of the top 50 markets in the U.S. That would be a staggering 400 new-car dealerships. Some Wall Streeters, noting that Huizenga lost out on a $4.5 billion deal for alarm company ADT Ltd. this year, believe he could spend $5 billion on new-car dealerships the next few years.

Huizenga concedes that “our focus now is new-car dealerships.” But he says the busted ADT deal has nothing to do with that. No matter. At the very least, he’s predisposed for some kind of big maneuver. Huizenga lives for the deal. He’s made more than 1,000 in his career, and adding a new-car capability is critical to Republic’s plan. Asked when he’d be likely to put the wraps on his first new-car dealer purchase, Huizenga responded cheerily, “How soon does your magazine come out?”

AutoNation’s womb-to-tomb car company will operate like this:

You buy or lease a new car from one of AutoNation’s new-car dealers. When the lease expires in two or three years, or you come back to buy again, AutoNation takes the old car and shifts it to Alamo’s rental business, which Republic bought for $625 million just last month. After the car accumulates some rental mileage, it’s shipped to an AutoNation megalot and re-leased or sold outright. Cars that come back again (either off lease or in a trade) are then sold. Any real junkers are shipped for sale to another used-car lot called ValuStop. At every step, AutoNation offers financing, insurance, service and accessories. In a perfect Wayne’s world, he’ll collect on a single car four times, not counting things like financing and accessories.

Will customers go for it? Huizenga obviously thinks so. He still recalls haggling over the price of his first car, a ’55 Chevy. He’s sure he got creamed. “There’s no way you can win,” he says. “Only the salesman knows what his costs are.” He believes the car-buying experience is so universally painful that there is a pot of gold waiting for anyone who can improve it. A no-haggle price is just the start. High-quality used cars come with a seven-day, full-refund policy and 99-day bumper-to-bumper warranty; used cars with heavy mileage are backed by a seven-day, full-credit exchange policy and a 30-day warranty. AutoNation can offer such enticements because it’s intimately familiar with a car that’s been in its system a couple of years.

Huizenga faces competitive challenges for sure: because cars are being built better and lasting longer, Huizenga may never get the inventory turnover he needs. But win or lose, it’s a good bet he’ll permanently change the ways cars are marketed. “This is something I believe in,” Huizenga says. “Americans grow up hearing and telling car-salesman jokes. That’s not how it has to be.”