More Work Needs to be Done…..

   

  Appearing on CNBC Squawk Box Mike Jackson Chairman and CEO of AutoNation as a guest host, advised that more work needs to be done to return the U.S. auto industry to viability. Along with the Honorable Governor Granholm of Michigan and T. Boone Pickens, Mr. Jackson reiterated the necessity of addressing the current major obstacles to the industry.

 

     Credit availability is still a large obstacle to current vehicle purchases, and typical lenders are rejecting most credit applications for the purchase of a car or truck creating a  difficult sales market for U.S. auto sales.  Consequently the selling rate of vehicles remains at about 10 million units per year. Mr. Jackson goes on to say “It is interesting to note that more vehicles are being “scrapped” in the U.S. than are being purchased.“   But Mr. Jackson is encouraged that the Federal Reserve has announced that in February it will accept securitized auto loans as collateral.

 

     As to the price of gasoline, it is essential for continued movement toward hybrid and electric vehicles to revisit the increased taxation of diesel fuel and gasoline. Mike Jackson strongly contends that the industry can not continually be whipsawed back and forth with the market pricing of fuel going to extremes levels as recently experienced. Detroit has to make long term investments in technology for the improvement of fuel efficiency while the prices of gasoline and diesel swing wildly. 

 

     Similarly Mr. Jackson went on to say that Detroit also must not be trapped into “fixed labor costs” in an industry that is extremely cyclical and though some movement in labor agreements has been made, much more needs to be done to allow the domestic auto companies to control labor costs relative to production requirements in contrast to maintaining labor contracts which fix labor costs throughout boom and bust cycles which is not a sustainable model.

 

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                                                                                                     Part A

 

                                                                                      

                                                                                                      Part B

 

                                                                                                      

                                                                                                          Part C