Mike Jackson Chairman and CEO of AutoNation....in a CNBC exclusive, indicated that finally the auto credit markets might be relieved as money from treasury has been loaned to the financing arm of General Motors; with more expected to arrive at Ford and Chrysler financial credit institutions as well, granting a return to viability for the auto industry. "This is a very significant step and a positive outlook for the American economy."
‘We were just asking for a return to normal credit’ Mr. Jackson goes on to say, as loan approvals, even for the best auto customer, were down to below a 60% rate of acceptance.
'We must now bypass the traditional banks, Mr. Jackson contends, as the banks are not lending as yet and the Federal Reserve needs to consider taking auto loans that can no longer be securitized on to their balance sheets. We expect this to happen sometime soon. This may bring the auto industry credit markets back to normal.'
'Car sales in the U.S. on a per capita basis are at or near depression levels and the situation just experienced within the auto credit industry has been unprecedented.'
Click on video icon to view.
Mike Jackson Chairman and CEO joined by Mike Maroone President of AutoNation, the largest car dealership in the United States, responded to the good news from Washington as a result of the Bush administration providing a 17.5 billion dollars in a bridge loan, with "tough" conditions, to the Detroit automakers; General Motors, Ford, and Chrysler. On CNBC and Bloomberg Television Mr. Jackson reiterated the circumstances which precipitated the dramatic plunge in auto sales in the United States in the past six months. 'The auto industry actually deserves this relief as auto loan secutitization has been cut off since September 15th of this year.'
Mike Maroone expressed similar concerns on the Fox Business network. 'The issue is "available credit to the auto customer" and currently this is a huge problem in the showroom. 'The bridge loan gives Detroit time to create their plans for viability, but the credit issues need to be addressed with similar urgency.' Mr. Maroone goes on to say that the sales slump goes across the board with all car sales in the U. S. both import and domestic; and loan approval rates previously in the 90% range are now at the 60% rate and we are now seeing the current sales slump across all brands. What is needed are avenues to be created to securitize auto loans by funding the finance companies allowing them to provide the necessary credit to customers.
Mike Jackson spoke in support of this in that "Credit to the auto industry is as jet fuel is to the airlines," and with the “overnight” freezing of credit, as a result of the Wall Street crisis, much damage was done to all auto producers within the country. Mr. Jackson went on to say that ‘we have had an extraordinary event stemming from this credit crisis. 'With the restoration of credit we could have a 25-30% improvement in car sales quickly. Until auto loans can be securitized again, times will continue to be difficult and we hope that Secretary Paulson and the Treasury can find avenues to assist in relieving the constrictions on the securitization of loans.'
Mike Jackson went on to say that the U.S. automakers do have to pay for the "sins" that have been made over the past decades, but they have been making very good progress in the recent years with major improvements manufacturing quality, manufacturing efficiencies and engineering innovations; and during the next four years much innovative progress will continue to be seen.
Click on video icon to view Mike Maroone on Fox Business
Click on video icon to view Mike Jackson on Bloomberg Television
Wall Street Journal..
by Mike Spector
Dealers have a lot on the line in this week’s congressional hearings on a bailout for Detroit’s auto makers. The National Automobile Dealers Association says 700 dealerships have gone under this year and that the number could double next year.
One of Detroit’s big problems is it has too many dealers, which compete against one another and steal sales. If GM and Chrysler fail, many more dealerships will shutter. But even if they get bailout money, Detroit’s auto makers could eliminate thousands more as part of restructuring plans submitted to Congress.
But are those plans aggressive enough? The short answer, at least for GM, is no, according to Rich Kwas, a Wachovia Corp. analyst. GM plans to cut its dealership count to 4,700 from about 6,500 by 2012, but that still won’t make them competitive enough with Toyota and Honda, he says.
“I don’t think it goes far enough,” Mr. Kwas said. “Even if they cut their store-base to 4,700, they’re only selling almost 570 units per store. That’s well below what Toyota and Honda do.” Using various market-share estimates, Toyota would still be doing about three times the sales volume per store as GM in that scenario, while Honda would do about twice as much, he said.
“You’re really not closing the gap on throughput, which is what you need to do,” Mr. Kwas said, adding that GM needs to get its dealer count closer to 2,000. “Ultimately it comes down to how much you eliminate the irrationality in the market,” he said, adding that 4,700 GM dealers would still “cannibalize sales.”
Still, in a research note, Mr. Kwas said bankruptcy, while the “clearest path to dealer consolidation” for Detroit, would “likely drive liquidations rather than successful reorganizations, in our opinion.”
Mike Jackson, Chief Executive of AutoNation Inc., the nation’s largest dealership chain, said a regular bankruptcy would unleash liquidations across the industry. “If GM just goes into bankruptcy, nobody’s going to buy their product. There are too many resale and warranty issues and you end up in Chapter 7.” “There is no debtor-in-possession financing available, there is no exit financing available, meaning a normal Chapter 11 becomes Chapter 7 within days and the company is in liquidation.”
In that scenario, “the entire dealer network is also in Chapter 7,” he said. “The whole thing dominoes pretty quickly.”
A government-sponsored bankruptcy would be preferable, Mr. Jackson said. But even then, manufacturers would likely have power to close dealerships, even if they’re protected by state-franchise laws. “There’s no way you’re going to prepackage franchise agreements,” Mr. Jackson said. Auto makers will “certainly have the power to terminate franchises.”.....
But that would create a “long protracted mess,” Mr. Jackson said, because there would be “a tremendous dispute over compensation, which is going to trigger lawsuits.”
To Marc Cannon Senior Vice President AutoNation
Dear Marc Cannon,
I know that you as a company are receiving a lot of letters, some good and some that are not so good. but I would like to take the time to tell you about the time that I was in AutoWay Nissan of Brandon Florida.
I was thinking about buying a new car, nothing big or with a big price tag. I had looked all over town, trying to see what was available. I had gone to Ford, GM, Honda, but had found nothing to meet my needs.
There was no salesman that was willing to take the time to talk with me to discuss the type of car that I was looking for.
He began to show me some cars that were in the price range of what I was looking for. Then it got even better. We went inside and he showed me the cost of the car that I had some interest in, and how much it was going to cost me if I purchased the car.
A very big thanks to Leonard Kersellies of AutoWay Brandon Florida and AutoNation.
Thank You
Tristan Brown
"BMW Encinitas" of Encinitas California receives Special recognition from Mike Jackson Chairman and CEO of AutoNation.
During these difficult times, it is nice to see that AutoNation associates are “living” their commitments of quality service to the customer, and are providing examples of great corporate stewardship to the AutoNation team.
The AutoNation family, throughout the United States, is proud and thankful for all associates who have gone above and beyond the call of duty to enhance the “car service and sales experience” for customers who come to the AutoNation Dealer Group Stores for help in finding....
... "The Right Vehicle at the Right Price”..... as well as “Dependable Service with a Smile”.
So keep up the good work all AutoNation Associates and....Our Thoughts and Prayers go out to all Californians who have been affected by the devastating fires.
...Thank You to the Team of BMW Encinitas
Mr. Timmons ......AutoNation
"We just want to CONGRATULATE your exemplary staff - Aaron Webb and Gary
Cancinos and AutoNation as a whole for the superb service they provided to us in our purchase of a new vehicle."
"It is truly rare these days to find someone who really cares about giving their very best in service to their customer. Obviously, AutoNation hires the cream of the crop and assures that the people dealing with prospective buyers know the business and actually care about serving their customers. There are way too many car dealerships who are NIGHTMARES to the buyer and people in general dread the purchaseof a new or used vehicle because of the vultures they encounter. We had just that experience with another dealership and their buying program through another major company. We had made it perfectly clear that we were dealing with two buying programs and would choose the vehicle and the buying program based on finding what we wanted and also obtaining the best possible deal."
"The person who originally contacted us through this other company handed us off to a "vulture" who had NO CLUE about the buying program pricing and no desire to place us in the vehicle of OUR choice, but rather the one he had available. He proceeded to deny returning our keys to us as he said "I know we can make a deal now." NOT...We could not get him to understand that fact until we threatened to contact the police if our keys were not returned in five minutes. We left with a very bad taste in our mouths for this dealership and their unethical practices. We also notified the buying program and told them we would NEVER use them after this bad experience and would tell our friends and relatives to steer clear of both the dealer and the buying program. That incident occurred on Wednesday night."
Thursday morning, a breath of fresh air blew in...Aaron Webb!
" What a difference from the way we were treated the previous day! Aaron had contacted us promptly after we registered online with UPROMISE and sought to find out what we were looking for and how he could assist us. Once we narrowed down the vehicle we were interested in, Aaron went to work to find it for us. We had two colors in mind and when the first was not available, he located the second and proceeded to pave the way for the most efficient and EASY purchase of a vehicle EVER. He had his work cut out for him as we had already applied for NMAC online and had been turned down. We then went to UPROMISE and applied for their financing. It was immediately approved and the blank check was to be sent out today. When Aaron saw the interest rate they offered us, he offered to step in and take our information and find us a better deal. He did not have to do that...we had financing and he could have sat back and just said...it is a done deal. "
"However, Aaron went the extra mile for us and worked very hard to secure the 2.9% and the $1,000 rebate from Nissan. He worked tirelessly with me ALL DAY long to get all the information and have the vehicle of our choice available and ready for delivery Thursday night. What an incredible employee you have in Aaron Webb! He got it done in one day and it was SEAMLESS! He referred us to Gary Cancinos for delivery and again we have nothing but praise for the process. Gary greeted us and first things first had us check out the vehicle and have George Harbin (Maroone) go over all the fundamentals of the operation and set up Bluetooth for our cell phones etc. George was amazing...He also went above and beyond in getting the car put into the garage out of the heat and weather for us to see and learn about. He transferred our license plate and assisted Gary in the delivery of the most beautiful Nissan we have even seen. We then went back in with Gary who had everything incredibly organized and color coded for signing. It was again seamless and smooth and we were in and out with our new car in record time. Even the receptionist was eager to assist with our receipt even when it was late and time for her to leave. Everyone had smiles and really portrayed a caring attitude about doing business with us."
"AutoNation has secured our business from here on out and the UPROMISE program will also be given this information as well. We know that companies hear all the bad stuff and complaints on a regular basis, but we feel that praise for an excellent job should be given when everyone goes the extra mile to assist a customer. Aaron, Gary and George all deserve the ultimate in praise for excellent service and concern for their customers. They are all truly assets to the AutoNation team in every way."
"MANY, MANY THANKS to Aaron, Gary, George and the AutoNation Direct team for being the very BEST in the automotive sales field."
Wall Street Journal June 9, 2008; Page D10
AutoNation CEO Says Increase Will Drive Demand For Hybrids, Electric Cars and Other Alternatives
…….Detroit's big auto makers are slashing jobs, closing factories and undertaking costly revamps of their product strategies to cope with $4 a gallon gas. What's the worst thing that could happen now? Gas could get cheap again, says the man who runs America's biggest auto retailer.
"For once we actually have viable alternatives and exciting technology that are really game changers" in the effort to wean transportation from petroleum, says Mike Jackson, chairman and chief executive officer of AutoNation Inc. "However, if the price of petroleum goes down … it undercuts the viability of new technology."
"You have to tell the American people the truth," he says. "Energy costs will be higher."
It might seem odd that America's leading car salesman would want gasoline prices to stay high, given how much damage the recent surge in pump prices has done to demand for the big sport-utility vehicles and pickups that once powered sales at many AutoNation stores.
But Mr. Jackson's point of view about energy policy and the auto industry isn't based on concerns about this month's sales. What has him worried, he says, is that in the future he -- and by extension the whole auto industry -- will be stuck trying to make sense of a fundamentally incoherent national energy strategy, which was mirrored by the seemingly incoherent product strategies that the big U.S. auto makers were pursuing until $130 a barrel oil blew them up.
Mr. Jackson confronts a daunting challenge trying to read American culture and make intelligent bets about what consumers will want to drive.
If he looks in one direction, he sees a widespread consensus that, for a combination of environmental and national security reasons, Americans should consume less oil. To that end, Americans want the auto industry to speed production of electric vehicles and high-mileage, gasoline-electric hybrids, while substantially improving the mileage of conventional oil-powered cars.
Here's the big news: The auto industry finally appears willing and eager to respond.
It's entirely possible that a decade from now, we'll realize that this was a pivotal moment in the auto industry's history. This could be the moment when a century of relying almost exclusively on petroleum to power personal mobility gives way to a new model, in which electricity powers our transportation.
Indeed, there's a case that consumers who want to buy into the next generation of transportation technology shouldn't buy a new car until 2010 or 2011. By then, General Motors Corp. has promised to deliver its hybrid-electric Chevrolet Volt; Nissan Motor Corp. has said it will begin offering electric cars; Honda Motor Co. and several European manufacturers have promised to launch in the U.S. new, advanced, high-mileage clean diesel cars; and Toyota Motor Corp. might have a whole family of hybrid vehicles based on the next generation Toyota Prius.
A gaggle of small companies such as Norway's Think Global AS and Silicon Valley's Tesla Motors Inc. are all gearing up to expand the electric vehicle market if the big guys won't. But the excitement over projects like the Tesla Roadster can't compare to the significance of the shift in mindset among the people who run the world's biggest auto companies. This isn't a crowd given to green idealism, but they have come to the conclusion that remaining totally shackled to petroleum is bad for business and are re-gearing their future vehicle plans accordingly.
But when Mr. Jackson looks in the other direction he sees a widespread consensus that Americans shouldn't have to pay $4 a gallon or more for gasoline, and a Congress that in an election year has put driving down gas prices at the top of its agenda.
Further, he confronts the inertia of more than half a century of automotive marketing investment in teaching consumers that size and power are what make a vehicle desirable, and worth more money.
Mr. Jackson, like others of his baby boom generation, remembers well what happened in the 1980s, after the last big oil price shock. Through a combination of conservation and new production, the U.S. turned the tables on the oil producers. Gas prices plunged, sales of gas guzzlers took off and the table was set for the crisis the U.S. auto industry faces today.
"We are highly skilled at selling size, horsepower and speed at a premium price, and giving away fuel efficiency," Mr. Jackson says. "Now, going forward over the next 10 years we are going to have to convince consumers why they should pay more for a smaller engine…or some new technology that is going to give them a tremendous benefit on fuel efficiency. That's a completely new world for us."
"I'm a good car salesman," Mr. Jackson says. "If I have high gas prices and an open-minded consumer, it's very doable. There is a connection between their needs and what we have to offer them. If we have cheap gasoline, it's mission impossible."
