Autonomous cars may not need a driver, but they still need a good mechanic.
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Waymo LLC, the driverless-car unit of Google parent Alphabet Inc., has signed up AutoNation Inc. to service robovans that are being tested in Arizona and California. The agreement, announced Thursday, shows the Silicon Valley tech giant is closer to deploying vehicles on public roadways without humans behind the wheel.
The agreement is separate from a June deal where Avis Budget Group Inc. agreed to park Waymo vehicles at rental lots and do routine maintenance, including oil changes, tire rotations and cleaning. AutoNation, the largest dealership chain in the U.S., will provide mechanical and cosmetic repairs to Waymo's fleet.
Waymo is considered a leader in autonomous-car research and has been transitioning to operating a fleet of hundreds of Pacifica minivans built by Fiat Chrysler Automobiles NV that are retrofitted with extensive software and other gear so the vehicles can drive themselves. Waymo, which is competing with several auto makers in the driverless car race, showed off new demonstrations of its technology on Tuesday.
Auto dealers sell new and used cars but book a big chunk of their profits on financing and servicing vehicles. Many of them, including AutoNation, have been experimenting with ways to become more relevant if car usage becomes more of a shared service and people no longer need to be the primary driver of their car.
AutoNation has begun servicing self-driving vehicles in the Phoenix area, where Waymo has launched a program that gives hundreds residents free rides in the self-driving cars. Mike Jackson, AutoNation's chief executive, said he has been making regular visits to Waymo headquarters and realized his dealership group could have a role in the commercialization of self-driving vehicles.
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"We're able to put in place the strategic maintenance and care program for each vehicle that will proactively make sure it's always operating at the highest safety levels and will optimize the life cycle of the vehicle," Mr. Jackson said in an interview.
In a statement, Waymo Chief Executive John Krafcik said the two companies have "a shared vision of enhancing the in-car experience" and AutoNation will help to ensure "Waymo vehicles are always in top condition as we bring fully self-driving cars to the public."
"This is additional business for us," said Mr. Jackson. "I believe Waymo is going to grow--I think they have the right approach and we're going to grow with them."
AutoNation said its technicians have the expertise to maintain and repair the vehicles but as the partnership grows, they will hire more technicians to meet demand.
The Waymo deal is a part of a broader AutoNation effort to reduce its dependence on low-margin new car sales. In the last quarter, it opened "AutoNation USA" used-car centers and expanded into branded car parts, auctions and collision centers.
Separately, AutoNation said its quarterly net income from continuing operations fell 9.5% from a year earlier to $1.00 a share, beating analysts' expectations by 16 cents. Revenue fell 2.7% to $3.2 billion.
Same store used-vehicle gross profit was up 9% from a year earlier.
Write to Adrienne Roberts at Adrienne.Roberts@wsj.com
(END) Dow Jones Newswires
November 02, 2017 07:44 ET (11:44 GMT)