Mike Jackson Chairman and CEO; and Mike Maroone Chief Operating Officer and President of AutoNation, appeared on Fox Business Television as well as Bloomberg Business Network and CNBC; to provide guidance on the current state of the U. S. auto industry, and reflect on the positive past quarter revenue and earnings results for AutoNation.
AutoNation out-performed the market with $2.7 billion in revenue and was solidly in the black for earnings. However, during each of their 40 years of experience, Mr. Jackson and Mr. Maroone stated that they had never seen a time like this in their professional lifetimes. It was a brutal quarter for the industry, and AutoNation had to work very hard on the cost side to make up for the lost volumes… stated Mike Maroone. This allowed the company to yield positive results during such a difficult time.
Mr. Jackson explained …‘Combine the break of consumer confidence with an inventory increase of fuel efficient vehicles during the retreat of gasoline prices, and the industry faced extraordinary headwinds as auto showroom traffic was off 20 percent and business volume was off 40 percent due to the lack of available credit.’ Over-all retail sales industry wide was down almost 50 percent.
Mr. Jackson went on to say, ' that if the U.S. Federal Reserve can implement the purchase of credit securities in February of this year, this would help directly in freeing up the credit markets quickly, and we may see a normalization of credit begining in the month of March. Right now, it is difficult to place commercial paper with any institution, and the industry needs help in this regard. We are looking to February, and have a lot of hopes that the Fed will be able to implement this program at this time.
As to the stimulus plan; Mr. Maroone indicated that “every little bit helps", and 'though the "stimulus" plan would provide some positive results, it would only be a part of helping the economy. It is the “credit availability” that would be most significant in helping the auto industry to recover to more normal functionality,' Mike Maroone explained.
Fox Business specifically asked about some programs available in countries such as Germany and France which provide a $1500 to $2500 in tax credits per vehicle to individuals who turn in a used car for a new car? Mr. Jackson indicated … 'This is a quite interesting program" and he felt that it helped these countries improve and modernize their fleets'…Mr. Jackson went on to saythat, currently the average age of U. S. automobile is about 9-10 years and that these older cars contribute disproportionately to air pollution and the lower average U. S. fleet mileage as well. 'The fleets in Europe are 30-40 percent more efficient in fuel milage as a result of these types of programs as well as the implementation of higher gas taxes on fuel.'
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From Automotive News David Sedgwick January 21st, 2009
Somebody must have fed truth serum to Mike Jackson. At the Automotive News World Congress today, he delivered a speech that was funny, biting and very, very blunt. Perhaps it was the credit crisis that pushed him over the edge. Dealerships across the country are struggling to line up loans for customers with less than sterling credit. And AutoNation is no exception, says Jackson, the company's CEO.
Meanwhile, Chrysler Financial accepted 22 contracts from AutoNation stores in December, down from 823 a year earlier. "You can't do business without credit," he said. "It's like running an airline without jet fuel. That plane isn't leaving the ground without jet fuel."
He had plenty to say on other topics. After asserting that the United States has no coherent energy policy, Jackson warned that consumers won't buy a new generation of fuel-efficient electric cars, plug-ins and diesels unless it's in their economic interest.
And with gasoline costing less than $2 a gallon, saving fuel is no longer a pocketbook issue. "We are letting the American consumer be whipsawed back and forth" by gyrating gasoline prices, he said.
He proposed an increase in the gasoline tax -- say, a $1 hike spread over a five-year period -- to give consumers an incentive to buy fuel-efficient vehicles. Congress shouldn't raise the gasoline tax immediately, Jackson cautioned. Its first priority should be to revive the economy.
During the Q&A session, Jackson was asked for a "buy, sell or hold" rating on various brands. He obliged. Honda is a "buy," while Dodge is a "sell." Jackson said he "didn't understand" Acura or Lincoln, and he joked that Volkswagen managers couldn't understand why Americans would reject such clearly superior cars.
Chevrolet is the only brand that GM needs, and Jackson adds that he is "not a big fan" of the Korean automakers.
And on, and on. Jackson got his share of laughs, but one got the impression that he was telling exactly what he thought. No filters, no censorship, no Miss Manners.
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Appearing on CNBC’s Squawk Box and Bloomberg Television, Mr. Mike Jackson Chairman and CEO of AutoNation, was asked about the advantages of Fiat joining with Chrysler as a 36% owner. Mike Jackson felt that a “deal had to be done”; and with Chrysler concentrated with trucks in the U.S. and Fiat a world class small car manufacturer concentrated in Europe, it is a win - win for both companies. Fiat would bring world-class fuel-efficient technologies to Chrysler allowing the company to excel in its development of improved efficiencies with minimal costs of development. It would bring world-class small cars to Chrysler and it would take years for Chrysler to develop these technologies on its own.
In his keynote address at the Automotive News Conference, Mr. Jackson will address what has led the U.S. auto industry to where it is today and what needs to be done to return the industry to sustainability. Mr. Jackson will address the following problems currently facing the industry….These are the re-normalization of the U.S. financial service industry, the necessity of a significant stimulus package to be provided by the Congress, and especially the need for the newly elected administration to restore confidence and trust in the American people in their institutions.
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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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