Asked this morning of his opinion on the resignation of Fritz Henderson as Chief Executive Officer of General Motors in an apparent shake-up by the GM Board, Mike Jackson Chairman and CEO of AutoNation, the largest retailer of GM cars and trucks in the United States, responded that he was 'as surprised as everyone else' at the resignation and expressed his regard for the talents of Mr. Henderson as CEO of GM as Mr Jackson had an opportunity several times to work with Mr. Henderson closely on issues regarding the re-building of the U.S. auto industry. Just recently Mr. Henderson joined Mike Jackson at the Huizenga School of Business and Entrepreneurship of Nova University in South Florida, to present a "Current State and Strategic Recovery Analysis of the U.S. Auto Industry" at a Town Hall meeting that was presented to the students and faculty of the university.
As a result, Mr. Jackson knew in general the "approach" and basic philosophy for the reorganization of General Motors and thought that the path to recovery the company had taken was viable and the goals the government "Auto Task Force" would have expected to be accomplished would be achieved. It was clear that the plan that did come into fruition was in part a result of the strategic guidance and contributions of Mr. Henderson and others. 'I am concerned for the future because of this change... and thought they (Fritz Henderson and Al Whitacre) made a great team.' Mr. Jackson concluded.
Never the less; one can only speculate as to why Fritz Henderson has left GM.....? Mr. Jackson continued...'one can only conjecture of possibe friction "built in" to a management team at GM that may have led to the resignation.' 'When a Chairman of the Board and the Chief Executive Officer are two different executives, they inevitably will have different approaches to strategic management of a company. And, with the stakes so high with a company such as General Motors, these differences are easily exacerbated simply by the magnitude of the issues'.. Mr. Jackson explained possibly that one could look at the various international deals that GM had undertaken to divest itself of several unwanted divisions or lines such as Opel, Saab, Hummer, and Saturn as examples and the possible controverseries surrounding the implementation of these "deals". But, it is really difficult to say what was the "real reason" for the departure.
Ed Whitacre, the current Chairman of the General Motors board, will now have to step up to fill the void left by Mr. Henderson as CEO Mr. Jackson went on to say...and this will not be easy. However, Mr. Whitacre is an extremely capable individual who was tapped by the Auto Task Force to head GM after his retirement as Chairman of the Board and Chief Executive Officer of AT&T. There he developed and grew the current AT&T from a local regional telephone service provider back to its original glory as a major communications company with a national footprint similar to the original AT&T and this was done mainly through acquisition and reorganization. Mr. Whitacre maintains a steller reputation for management at the highest levels.
However, the government does send 'mixed signals' . The Automotive Task Force is still in charge of the auto industry reorganization and often signals sent to the industry differ in tone and style as what is expected from the executives in charge. This makes management of a company's re-organization very difficult; particularly during this time of industry upheval and"turn-around".'
... In conclusion Mr. Jackson is still skeptical as to why Fritz Henderson left General Motors. However, from a purely "talent point of view", he believed that the company was on the right path to recovery and indicated that the talents of Fritz Henderson were much appreciated...Mike Jackson and AutoNation do remain hopeful that the GM reorganization plan will continue to unfold positively for the future of the company and the rest of the U.S. auto industry as well.
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Mike Jackson Chairman and CEO of AutoNation, joined former Bush Administration official, Larry Lindsey - former director of the National Economic Council (2001-2002), and Assistant to the President - on CNBC squawk box to weigh in and analyse three important subjects currently affecting the United States . The three basic economic topics that are discussed are health care, the economic stimulus plan, and the current state of the U.S.economy as well as the possibility of a future economic recovery from the current level of economic activity.
As to health care, there is general agreement between Mr. Jackson and Lawrence Lindsey that the rate of inflation in health care costs is unsustainable, and that something systemic must be done to bring these costs back in line with current economic growth. Mike Jackson particularly was emphatic in that an increase in competition within the health care insurance industry would bring out the best in health care insurance efficiencies and begin to lower costs. ..." We must remove the "antitrust" exemption that the industry now enjoys, and health care insurance should be allowed to be sold witout interstate restrictions; in other words, the health insurance companies should be allowed to compete across state lines"... Mike Jackson goes on to explain "you have states like California who are near bankruptcy, but yet they demand total legislative control of health plan services provided within their state an the legislature requires many extra services to be provided which are not the normal basic preventative medicine services, but rather the more expensive cutting edge insurance extras that escalate health care insurance costs and consequently insurancce premiums. Then they complain the their insurance costs witin their state are "out of control". 'This is a great example of the states talking out of both sides of their mouths with regard to this issue. Competition on a nationalized group level must be permited in order to reduce insurance costs.'
Mr. Jackson continues that, in his view, 'companies such as AutoNation have "worked hard" for the past ten years to reduce health care costs and now the current health care bill in congress; that has passed the "House of Representatives" and has been accepted into the Senate for debate after the Thanksgiving recess; will dramatically increase health care costs not lower them.' Taxes will be increased as well.
As for the effects of the stimulus plan; both men agree that not many new jobs have been created. "Shovel ready jobs" such as civil engineering have even dropped along with housing construction as Lawrence Lindsey indicated. It seems that special interests sections in the "bureaucracy" have benefited from the stimulus money; but the overall effect on the economy as a whole, has seemed marginal at best. "They just did not get it right in its initial design", Mike Jackson contends. 'Nevertheless, I believe we are at the bottom and people are looking forward to a modest recovery. He wen on to say that a second smaller stimulus would be particularly helpful at this time. But the mechanism needs to be more targeted toward a leveraged method of stimulus.'
However it is believed that the general economy will recover but future economic growth will improve slowly. Mike Jackson indicated that 'it wont be until 2011 that the U.S. auto industry will see annual unit sales rates of "mere recession levels", but goes on to say that what was undertaken in the auto industry was not short of "phenomenal". 'We underwent several years worth of reorganization in a "six month periods" and the reinvention of the auto industry has been performed remarkably, but the isdustry still needs an iscrease in the availability of credit to qualified consumers.
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Health Care
The Stimulus Plan
The U.S. Economy
Release Date: Thursday, November 19, 2009
Senator John McCain suggests
Congressman Peters not “Objective Observer” Congressman
Peters Introduces McCain to Objective Industry Experts .....
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Washington, D.C. – Congressman Gary Peters today again defended Chrysler and its workers against Senator John McCain’s latest assertion that Chrysler will soon fail, this time with the help of objective industry experts. In a letter sent yesterday to Congressman Gary Peters, whose district is home to Chrysler Group LLC Headquarters in Metro Detroit, Senator John McCain clung to the prediction he made earlier in the week that Chrysler is going to fail. In yesterday’s letter, Senator McCain suggested that any “objective observer” could not believe that Chrysler will survive. Congressman Peters today responded to Senator McCain with a hand-delivered letter illustrating that highly regarded, independent, “objective” industry experts believe Chrysler will succeed and offered to arrange a meeting with him and such experts (text of letter and quotes from independent experts below, click here to view a copy).
In his letter, Peters said, .....“You may be right in suggesting that I am not a completely objective observer when it comes to the American automobile industry. I am an unapologetic supporter of our auto companies and the millions of Americans whose livelihoods depend on their continued viability. Taking you at your word that you are interested in hearing from objective, independent observers, I would like to provide you with the names of some well known auto industry experts whose credibility and objectivity are unquestionable. I would be happy to arrange for you to meet with any of these individuals at your convenience.” ..... Congressman Peters suggested that the best venue for this meeting may be the North American International Auto Show in Detroit in January so he can see quality American made vehicles firsthand.
While serving as grand marshal of a NASCAR race in Arizona last weekend, Senator McCain said “anybody believes that Chrysler is going to survive, I'd like to meet them.” Tuesday Congressman Peters sent Senator McCain a letter accepting his offer, saying that he believes in Chrysler and would meet with him anytime discuss the future of Chrysler and the contribution the company makes to our nation’s economy, and invited him to Michigan to meet with thousands of Chrysler employees who believe in the company and are working hard toward its continued success. Senator McCain’s initial response appears to decline Congressman Peters’ invitation because he does not believe he is an “objective observer.” No word yet whether Mr. McCain will meet with objective industry experts.
The text of Congressman Peters’ latest letter to Sen. McCain, with quotes from industry experts, is below. The letter was faxed and hand delivered to John McCain’s Senate office.
Click here to view a copy of Congressman Peters’ latest letter.
Click here to view a copy of Sen. McCain’s letter to Congressman Peters.
Click here to view a copy of Congressman Peters’ initial letter.
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November 19,2009
Senator John McCain
241 Russell Senate Office Building
Washington, DC 20510
Dear Senator McCain,
Thank you for your recent letter clarifying your remarks regarding the future of Chrysler, and for your kind words regarding the people of Michigan. You may be right in suggesting that I am not a completely objective observer when it comes to the American automobile industry. I am an unapologetic supporter of our auto companies and the millions of Americans whose livelihoods depend on their continued viability. Taking you at your word that you are interested in hearing from objective, independent observers, I would like to provide you with the names of some well known auto industry experts whose credibility and objectivity are unquestionable.
Mike Jackson is the Chairman and CEO of AutoNation, the country’s largest automobile retailer. Mr. Jackson has responded positively to Chrysler’s new business plan and has expressed an interest in acquiring additional Chrysler dealerships. Earlier this month Mr. Jackson appeared on CNBC and said, “My clear assessment is (Chrysler) will (survive) … they will make it.”
John McElroy is a widely respected automotive journalist, appearing in numerous print and broadcast sources. He recently stated, “Before going into Chrysler’s media briefing yesterday I wasn’t sure if the company was really going to be able to survive. Now that I’ve seen their five-year plan I think they have a reasonable chance of making it.”
David Cole is the Chairman of the Center for Automotive Research, a nonprofit organization widely respected for its analysis and observation of the auto industry. In a recent television appearance Mr. Cole said, “[M]y own conclusion is that GM, and Chrysler/Fiat, Ford I think are going to be around for a long time.”
I would be happy to arrange for you to meet with any of these individuals at your convenience. Better yet, I would like to extend to you an invitation to attend the North American International Auto Show in Detroit on January 11th through the 15th so that you can see first hand the world class cars and trucks being offered by America’s automobile manufacturers. I extend this invitation with the utmost sincerity and with the hope that we can work together to help build a better future for our country.
Sincerely,
Gary C. Peters
Member of Congress
Mike Jackson and Mike Maroone - Always Thinking - Influential
The legendary Wayne Huizenga left joins center right Mike Jackson and far right Mike Maroone of AutoNation in accepting the award of "Visionary Dealer of Past and Present". This very special award is given by "Automotive News", in Detroit, to the outstanding "world class" dealership that demonstrates original strategic thinking and planning for the advancement of the auto industry.
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" As CEO of this public retailer for the past decade, Mike Jackson, now 60 has taken on the Detroit 3, backed a federal gasoline tax increase, and publicly scolded the automaker's captive finance companies for cutting off consumer credit."
"As AutoNation’s COO Mike Maroone helped pioneer online car and truck shopping by listing vehicles at the company’s dealerships on the internet as early as 2002. Mr. Maroone, now 55 also worked to create greater transparency in dealership sales and finance transactions."
"AutoNation now boasts 15 billion in annual revenue, 210 dealerships in 15 states and 17,000 employees. The company says it sells more vehicles online than any other retailer. And, AutoNation has become a power voice for all U.S. dealers, championing their concerns in Washington, and Detroit."
"In 2006 Mike Jackson accused Detroit of building too many vehicles and loading them with high sales incentives. Those practices were causing residual values to plunge and inventories to bulge uncontrollably. Mr. Jackson considers his view considerably prescient when General Motors and Chrysler sought a U.S. government bailout; then filed for bankruptcy protection this year".
"Last year as the debate raged over higher fuel efficiency standards, Mike Jackson urged the lawmakers to raise the gasoline tax. Fuel prices spiked to $4.00 per gallon before to $2.00 but they are rising again. Now other industry executives including Ford Motor company’s Chairman, Bill Ford, are echoing Mike Jackson's call."
"Even when the housing market was booming in 2006, Mike Jackson was warning that an overheated market would collapse and bring auto sales down with it. Many of AutoNation dealerships are in Florida and California where the housing collapse has been more pronounced".
"Before joining AutoNation Mike Jackson was CEO of Mercedes Benz USA. Mike Maroone joined AutoNation in 1997 and became COO in 1999. AutoNation had acquired his Maroone Auto group; a group pf South Florida auto dealerships."
"At AutoNation, Mike Maroone launched the “Smart Choice” finance and insurance programs, which dealerships across the country have adopted. Consumers get a computer printed menu which lists payments and finance options, eliminating pencil and paper negotiations Mike Jackson and Mike Maroone have also created the AutoNation “Pledge of Finance” transparency. The company dealerships must inform potential buyers of the finance costs up front and guarantee not to mark up wholesale interest rates by more the 3 percentage points. "
Congratulations are in order for a "job well done" to Mike Jackson and Mike Maroone of AutoNation. All look forward to continued success and though these may be difficult economic times; it is important note there are those in the U.S. business community that can guide the future of the automotive industry with rational but yet visionary strategic planning and thoughtful vision; as well as be a positive voice for overall U.S economic reinvention, revitalization and growth that is critical for the 21st century.
Joining Carl Quintanilla and Becky Quick on the CNBC set in New York, Mike Jackson Chairman and CEO of AutoNation gave an extensive analysis and frank assessment of the new Chrysler reorganization plan to be undertaken by its new owner Fiat. This plan was unveiled to the U.S. auto industry yesterday.
Months ago, at Chrysler headquarters, Mr. Jackson met with Sergio Marshionne CEO of Fiat SpA and now head of Chrysler LLC, to discuss the future of the "new" Chrysler LLC, and to go over the plans that Fiat had developed for the struggling car company. This meeting was also to help AutoNation determine the "weight and balance" it would give the Fiat and Chrysler brands within the AutoNation Store dealer groups here in the United States.
Make Jackson and Mr. Marshionne talked extensively about the new product mixes and the new Chrysler business model, as well as the new U.S. auto industry model of "demand pull" and how it will affect the narional vehicle unit distribution model that is now coming to the forefront of the U.S. distribution system now that the "old style" production push model is dead.
Mr. Jackson is impressed with the plan as he saw it unfold yesterday and as it compared to the discussions he had with Mr. Marshionne several months ago and is convinced of Sergio Marshionne that "this is a remarkable man. If anybody can succeed in turning the Chrysler company around it will be Sergio."
Nevertheless the situation was and is still serious. Consequently, AutoNation was cautiously waiting to see the unveiling of this plan to determine if Fiat had included criteria AutoNation believed necessary to allow it to move forward with capital expansion plans; and to what extent the Fiat and Chrysler brands would be included in these plans. Yesterday, the Fiat SpA unveiled their plan for Chrysler LLC and Mike Jackson concluded that this plan, if executed properly, would succeed and positive results would be achieved.
Mike Jackson and AutoNation were using for the following criteria to evaluate the viability of the plan that was unveiled. They are as follows....
· A recognition of the seriousness of the situation ?
· Was Fiat willing to intervene dramatically and immediately with existing products and not wait years for new product development within the product chain ?
· Was Sergio Marshionne truly committed as well as Fiat as a whole ?
· Was the unveiled plan "realistic" and could it withstand some economic stresses going forward ?
After a careful review Mr. Jackson is convinced that this plan "will work" and that Chrysler LLC, under the Fiat umbrella, will survive as a viable car company and eventually flourish. " Their cash burn is over and their plan will work even if everything remains the same for now "...Mike Jackson went on to say. 'In September the company broke even; so, in my opinion they will make it with this plan just on the cost structure side alone. Ultimately they will need more revenue. But, the question that needed to be answered now was that; in the worst case scenerio; if any economic disruptions occur in the next year or two; will Chrysler survive? We believe now that it will.'
Mike Jackson’s opinion is that, if properly executed, the plan unveiled yesterday will allow Fiat and Chrysler to recreate the Chrysler and Dodge names as profitable brands. This has been a significant development for AutoNation, as it had to determine whether to move forward to support the Fiat Dodge and Chrysler brands in its footprint within the United States. Now we can move forward positively. '
'The days of penny-pinching are over for Chrysler. The cash burn is over and they are now stabalized financially. Chrysler LLC has five billion in cash on hand with an additional two billion in a line of credit available to them. Nevertheless, AutoNation still views Chrysler as the riskiest situation we are currently facing. Consequently had committed to only about 3% of our portfolio to the Dodge and Chrysler brands in our existing stores. But now after what we heard yesterday, we will be increasing our positions in our existing stores and will be in an "acquisition mode" for future capital expansion as well ...Mike Jackson concluded we believe in this plan and are very supportive.
Fiat and Sergio Marshionne "know styling and brand marketing" and have been brilliant in their executions world wide. They clearly have a brand strategy for the existing Chrysler and Dodge lines. This plan will call for the splitting of Dodge between cars and trucks with the Ram being its own brand and Sergio is a master of brands. Mike Jackson goes on to say that Fiat will not walk away from Jeep. The U.S. consumer of the Jeep brand needs not to be concerned. Fiat clearly understands rugged the "body-on-frame" and solid axle advantages Jeep has in the industry.
As for AutoNation… "we get the Fiat 500 next year as a Fiat and are excited about this." The car is "adorable" and it will be an excellent first addition to our inventory …If AutoNation adds Fiat’s Alfa Romeo brand, this will be icing on the cake. But what needs to be remembered is the complement Fiat brings to Chrysler with its current car platforms, its diesel technologies, as well as other high tech engineering advancements the company has made over the last decade.
However, let us not believe for a minute that Fiat does not know that they are staring into the abyss. But, they are young and know what they are doing, and a leader like Sergio Marshionne at the helm they will have a high probability of succeeding. Nevertheless, this is a "make or break" situation for Dodge and Chrysler. It will be in the execution of this plan that will determine the success of these companies in the future.... "This is the final charge up the hill." and AutoNation will be supportive of Fiats efforts.
As to the current economic landscape under which Fiat will have to advance this plan; we are glad to admit that the U.S. auto task force did an amazing job of restructuring of the U.S. auto industry. Mike Jackson goes on to say...The structural excesses that were taken out last year has provided the U.S. with a new business model built around the consumer rather than the car manufacturers building excess inventory just to fill production capacity. As a result, the industry would then have to liquidate excess units through incentive plans that would deteriorate brands and residual unit values. This model was self destructive and unsustainable. Now we have improved cost structures with improved profitability and industry viability.
.......Consequently we are excited about our future relationship with Fiat as well as a new shared comitment with the Chrysler and Dodge brands going forward.
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This morning Mike Jackson Chairman and Chief Executive Officer and Mike Maroone President and Chief Operating Officer of AutoNation, the largest auto retailer in the United States, appeared on CNBC as well as Fox Business News to announce a stunning 36 cents per share earnings for the company’s operations for the most recent quarter of 2009. Analysts were expecting 35 cents a share............
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"This quarter was decidedly solid; " Mike Jackson explained to Becky Quick and Joe Kernan of CNBC. Mike Maroone appearing on Fox Business explained that even though revenue was down 13% and industry sales were down 11% ...there was a 44% increase of year over year earnings per share at AutoNation and we are excedingly optimistic about the future for the U.S. auto industry and particularly AutoNation as well.
Mike Maroone to Fox Business News stated that 'certainly 7 cents of these earnings was due to the greatly successful Cash for Clunkers program but in addition to this program, AutoNation was able to reduce inventory and improve year over year earninings over and above the earnigs gained by the program.'....' Reducing inventories allowed AutoNation reduce interest carrying costs and this was additionally helpful to the bottom line'.... Mike Maroone concluded.
Additionaly when asked, Mr. Maroone did indicate the AutoNation has been reinbursed by the government for the "Cash for Clunker" program rebates.
Both men agreed that the operating efficiency improvements that the company managed to implement for the past two years has allowed it to position itself for profitable stabilization of its operations this year and going forward into the forseeable future. Now the "risk profile for AutoNation has changed as a result of improving economic conditions and AutoNations ability to "weather the storm" of this most recent and catastrophic economic setback for the nation. Now, two acquisitions have been announced, and inventories of new product models will be positioned at the Dealer Groups to take advantage of the expected sales improvements as the economy heals. Inventories have been reduced from a 60 day to a 40 day supply.
Mike Jackson and Mike Maroone believe that the changes made by the U.S auto industry for a better rationalization of the auto industry model in the United States has positioned the industry for a significant recovery and AutoNation will experience a large part of this.
Mike Jackson sees the company at a significant pivot point. The production push model is solidly behind us and going forward we should inprovements in sales volumes and margins as we move into a cyclical growth period for the industry over the next five or six years. Mr. Jackson goes on to say that six months ago we would never have thought about the expansions that we are considering now: For example the company is strongly considering a 65% increase in "cap-ex" spending for 2010 and possibly a share buyback. There should be about 11 million in unit sales next year as the "Sword of Damocles" has been removed from over the industry. Consumer credit is improving and leasing programs are reviving.... We are extremely optimistic about the future.
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Mike Jackson on CNBC
Mike Maroone on Fox Business
In a coming together of US auto industry leaders for the advancement of higher education in U.S. "Business Management".....; Fritz Henderson CEO of General Motors and Mike Jackson Chairman and CEO of AutoNation joined the legendary entrepreneur and corporate leader - Mr. Wayne Huizenga - at the "Huizenga School of Business and Entrepreneurship" of Nova University located in South Florida to address the students and faculty in a "Town Hall" meeting..
"The Auto Industry - How we Got Here - Where we are Now - and Where are we Going".
"THE ROAD AHEAD"
Prior to their meeting with the assembly at the University, Fritz Henderson, Mr Jackson and Wayne Huizenga sat down with the journalistic staff of CNBC to be interviewed by their most seasoned journalists along with Mario Gabelli... famed Wall Street investor as to the progress that has been made in the U.S. economy as well as progress made in the strategic changes previously called for by industry leaders within the domestic auto industry and the changes expected in the global auto markets looking forward.
To begin, Fritz Henderson from General Motors believed we have "found the bottom" in the U.S economy recently and from the fourth quarter of this year into the year 2010, the auto industry should see the beginnings of acceptable but moderate growth. Responding to a question from Becky Quick :‘ asking if the industry scheduled milestones previously articulated by Washington, have yet to be completely accomplished. Mr. Henderson responded that the economic landscape and circumstances within the industry, as result of the "Cash for Clunkers program, had changed. For exanple, some General Motors plants brought back workers to meet the increased demand for fuel-efficient automobiles and slowed some lay-offs in other plants. GM is still confident that the plan to streamline all operations will continue.
On a different note, Mr. Henderson, in responding to a question about the sale of Saturn to the Penske Auto Group, said that GM was 'disappointed' in that the Saturn deal "fell through". GM did work hard in its commitment to being able to forge an agreement with Roger Penske but "in the long run it was the problem in that Roger’s long term 'source of product' fell through; and we couldn’t proceed on that basis" .....Now General Motors will and must move on. - Fritz Henderson concluded.
As to foreign markets, for example; General Motor's role as a supplier of cars and trucks within China....Mr. Henderson was quite optimistic.....'China is very important to the GM management in that 11 million units will be sold this year in the country. And just last month the equivalent SAR (annual unit sales rate for cars sold) in China was 16 million units..... The growth rate in China will be tremendous and GM expects to be a significant contributor to the vehicle sales within the country this year and well into the future.
On the other hand...when asked about Japan, Fritz Henderson saw little promise for any exposure by GM within that market as the Japanese domestic customer base and unit sales have been declining year over year for a long period of time. GM will not be in the Japanese market... Mr. Henderson concluded.
Mike Jackson addressed credit issues in that now, credit is much more available to the U.S. car and truck customer as compared to the beginning of the year; and most certainly from the last half of 2008 after the crash and bankruptcy of Lehman Bothers and the crash in global financial markets. Approval rates for car loans are improving, but higher interest rates and larger down payments are being required by the lender in order to secure a financed purchase for the car or truck customer. Next year, we should see total unit sales of 11.5 million units for all of 2010. These types of sales figures are still "depression level" figures. Mr. Jackson went on to say ....hopefully we will see return to just "recession" level annual vehicle sales figures by 2011 or 2012. After that, if all goes well, we will be back to more improved economic activity and more typical domestic vehicle sales figures of 13-14 million units per year.
Looking at the economic landscape right now, Mr. Huizenga believes we are at the "bottom" in the U.S. economy and we will be in this bottom of this economic pattern for a while. But ,we will be moving forward and conditions will improve moderately over time. As for South Florida in and of itself ; Wayne Huizenga sees South Florida as no more hard hit than the rest of the country save for the real-estate market which will take years to recover. But it will recover eventually in his opinion.
Mike Jackson, who leads AutoNation, was asked how will the auto industry "make headway" while unemployment levels within the U.S. still remain high….Mr. Jackson believed that the changes recently made within the industry will have a significant positive impact, but fully agreed with Mr. Huizenga in that the recovery will be slow. "But, forget depression levels" Mike Jackson goes on to say..."we would like to see just recession levels of sales right now…"
Mario Gabelli , weighed in on AutoNation’s ability to weather the global economic storm and congratulated Mike Jackson who indicated that though the company did go through a difficult set of circumstances, the changes in the new US domestic manufacturing model that GM has led for the past year will be significant for a recovery.
The ‘production push model is dead', Mr. Jackson concluded, and now the U.S. auto industry is on its way to enhanced viability, sustainability, and profitability. This will be good for the country and we have had our day of reckoning with the changes that were undertaken at Chrysler and General Motors this past year. The industry has had its revolution to a more rational manufacturing -distribution model; particularly with the fixed costs of labor reduced at the manufacturing level and with a reduced number of auto dealers within U.S. .......The industry is finally addressing past generational problems that have existed for years.
Fritz Henderson agreed in that GM has made many significant changes in the past year.... The company has aligned its capacity for a 10.5 million unit overall U.S. annual sales rate and the company has made tactical changes in its plants operations as to the flexibility of workers needed at any one time as well. "We have also reduced our legacy costs and the financial situation looks much improved for the company going forward."
The assembled leaders were all glad to be able to address the students and faculty at Nova University with the "lessons learned" within the auto industry over the past year; and to outline what may be in America's future.
Mr. Huizenga's dedication to the quality of the education within the Nova University Business School, which bears his name, was apparant and much appreciated by the students, faculty, as well as the South Florida community...Wayne Huizenga's ability to attract such masterful and high caliper business talent from around the United States has been a testament to his dedication in developing high quality strategic business management systems throughout the years of his leadership within the country.
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AutoNation Chairman & CEO Mike Jackson, Chief Financial Officer, Mike Short, Vice President of Shared Service Center, Maura Berney, and Senior Vice President, Public Policy & Communications, Marc Cannon, joined with our 275 members of the AutoNation Team to celebrate the success of processing over 13,000 Cash for Clunker vehicles with a total rebate due AutoNation of $54 million by the U.S. government
The recent work of the Shared Service Center (SSC) during Cash for Clunkers was a validation of AutoNation’s move to a common back office support group.....
Congratulations for a job well done ... AutoNation TEAM !
Mike Jackson Chairman and CEO of AutoNation the largest auto dealership in the United States spoke this morning on CNBC to give a better sense to the business community as to where the car industry is headed after the successful "Cash for Clunkers" program.
Now that it is ended Mr. Jackson indicated that the auto industry sold a total of about 700,000 "Clunker" vehicles in a four week period where the volume would normally have been 75,000 units sold. "Cash for Clunkers could be considered the most successful stimulus program of all time. Mr. Jackson goes on to say.... 'If you strip away the clunker deals in august, the sales rate is tracking at an annual rate 10.5 million upward trend line going into this month of September and inventories are now at an extremely tight level of about 2 million units within the country accross all dealers.
Mike Jackson also addressed the forward inventory build that is now necessary as a result of the success of the program and goes on to say that ... 'AutoNation has increased "forward" orders by 50%; this represents about 20,000 vehicle units. This increase in orders will continue in future months, and for the industry as a whole, this will probably represent about 500,000 – 1,000,000 units per month of vehicle orders to the manufacturers. So the domestic factories really will have a real shot in the arm as to increased production '
Becky Quick of CNBC asked Mr. Jackson specifically if the "Cash for Clunkers program has pulled forward sales from the future," and in his response Mike Jackson indicated that after reviewing the typical Cash for Clinker customer, he is convinced that the program in reality "Clawed Back" sales from a customer who would not normally have bought a vehicle had it not be for this specifically tailored program. These consumers really were non-buyers; typically very conservative, with no credit issues, and understood from the very beginning that this program also had the propose to the lift in the U.S fleet fuel efficiency.
Mr. Jackson goes on to say that 'now on the other hand the current problem we are facing now is that dealers across the nation are waiting to be reimbursed by the government for the rebates that were advanced to the customer. The car industry and particularly the auto dealers have provided three billion dollars to the program upon the promise that they will be repaid within 10 days and are now becoming a little nervous that this money will be reimbursed in a timely manner. Hopefully within the next 30-60 days the rebate money will be forthcoming. There is no question that U.S auto dealers will get the money owed to them by Department of Transportation. However, the government is fastidious in its operation and accounting operations of the program as inspectors are in the showrooms at this moment auditing the program paperwork of the dealers. AutoNation itself took careful strategic measures for the administration of its "Cash for Clunkers program paperwork, knows its paperwork is perfect, is owed 55 million dollars at the moment. We could use this money."' Mr. Jackson concludes.
Mr. Jackson addressed the future of car sales for the U.S. ....in response to a question from Steve Liesman - CNBC economist.
' As a baseline during the first quarter of 2009 the industry was selling at about a 9.2 million unit annual rate of sales. During the second quarter of 2009 we were selling just under 10 million units. If you strip out the Cash for Clunker’s Program to find the normal selling rate we see a 10 to 11 million unit selling rate nationally. Next year in 2010 I see a 11-12 million unit rate of car sales and production and then during the "out years" in 2011 and beyond, we should see a gradual recovery to a production and distribution annual rate of 15 to 16 million units.
Mr. Jackson also concludes that 'there will be price firming on future units sold as the industry cannot provide the incentives previously maintained to help boost sales, and because of the costs which will be incurred by the manufacturers to increase the required fuel efficiencies for the U.S. fleet.
So there is hope of a continued recovery of the U.S. auto industry and AutoNation is excedingly proud to be part of it...!
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Appearing today on Bloomberg Television, The Fox Business Network, Fox News and ABC News; Mike Maroone President and Chief Operating Officer of AutoNation – The nations largest car dealership – announced today that AutoNation is ending its participation in the most successful "Cash for Clunkers" program that was undertaken by the U.S. Department of Transportation in coordination with the nations auto dealers across the United States this past month.
AutoNation completed over ten thousand four hundred sales transactions as a result of the program, and has determined that it would be prudent to end the program at its dealerships this Friday evening to allow for time over the weekend to process the final paperwork. AutoNation is managing its processing for the "cash for clunkers program" at its quality control shared service center in Dallas Texas.
It will be helpful to have this paperwork completed by Monday evening, which is the time Washington has announced that they are ending their participation in the program after absorbing 1.9 Billion dollars in rebate requests from auto dealerships across the United States to date. Mike Maroone concluded.
' Yes we would love to see it extended', Mike Maroone explained, 'however as it has been an overwhelming success; more than anyone expected. Traffic to the AutoNation showrooms increased by about 30% and even non-cash for clunker traffic has increased. However, we do have a lot of paperwork to complete by Monday of next week, so it is time to declare victory over this portion of the national stimulus plan.'
'We are sure that this has been a "shot in the arm" for the auto industry, and the U.S auto manufactures were helped greatly by this. We also believe that now the US Department of Transportation will follow through as quickly as possible to send the appropriate rebate dollars to the auto dealers as necessary and have no doubt that they will follow through with this part of the program in a timely manner.
Mike Maroone explained, 'that AutoNation would continue to sell cars at extordinary prices with superb customer service; offering the great deals they always have, and we will look back on this program as the great success that it really was for our industry; as well as for the future of nation’s economy. We don't believe we have pulled too much business from the immediate future because sales statistics have shown us the "cash for clunker" customer was not the typical customer. They were predominatly conservative and hold on to a car much longer than average person. They were also smart in taking advantage of an extrodinary program during the short time it was available.
' No one expected the overwhelming success that the program was and we have seen non-clunker business increase also as result of the program. The industry-selling rate peaked at about 12 million units from a 9.8 million unit annual rate that we experienced earlier this year. Traffic in our stores was up significantly, and though there may be some drawback of volume in the near term, we expect the vehicle selling rate to remain somewhat higher than the unit annual rate we were experiencing earlier this year'.
'As for the mix of cars sold, approximate 65% of the new car transactions were for foreign cars though most are built right here in America, however the balance did come from models produced by the domestic manufacturers such as the Ford Escape and Ford Focus; and General Motors models '.
'Nevertheless the domestic manufacturers were helped greatly because of the program. General Motors, Ford and Chrysler have all increased production, and inventories have been reduced; so we go into the fall a leaner industry.' Mike Maroone explained.
However, more work needs to be done in providing more credit to the prime and standard markets and the reorganization of the domestic manufacturers continues as well....Progress is being made. Legacy contracts that have been so harmful to the future of the industry have, and are, being rewritten; and some obsolete plants have been closed...... All this will return the U.S. auto industry to a more efficient production-distribution platform,.
'At AutoNation we see a successful U.S. auto industry going forward with better days ahead...."We are looking forward rather than backward."'
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