" AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2009-second quarter net income from continuing operations of $55 million or $0.31 per share, compared to year-ago net income from continuing operations of $56 million or $0.31 per share beating analysts expectation by $0.05....."
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Mike Jackson Chairman and CEO of AutoNation, appearing on CNBC with Joe Kernnen, Becky Quick, and Mario Gabelli "famed stock analyst", indicated that the accelerated productivity and cost savings measures AutoNation agressively pursued over the past year led to the positive earnings over the past two quarters for the company.
Mario Gabelli indicated that the mark of" good management" is how they perform during difficult times, and he went on to say that the shrinking of the auto industry distribution base will favor the AutoNation model for vehicle distribution in the United States.
The "Cash for Clunkers" program has been an overwhelming success across the country and Mr. Jackson indicated that, to his surprise, the credit quality of those taking advantage of this federal program to remove older 'gas guzzling cars from the nation's roads have a group average credit score above 700; indicating that the more conservative - upscale customer is taking advantage of the program. This bodes well for the future of "Cash for Clunkers" and its viability in jump-starting car sales and improving the U.S. fleet average mileage lowering the United States dependency on foreign oil imports.
Mr. Jackson also appeared on Bloomberg Television as well as CNN Money; and Mike Maroone - President and Chief Operating Officer of AutoNation - joined Fox Business to review the most recent quarter earnings results for the company and additionally answered questions from the business community as to the sustainability of the "Cash for Clunkers" program and the positive results it is having for the auto industry and the Unitrd States as well.
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Jim Cramer , on CNBC's Mad Money - admitted that he 'missed' the accelerated stock advance of the auto dealers due to the arrival of the "Cash for Clunkers" program which has been so successful for spurring auto sales in the United States to date. The program was so successful that the first traunch of one billion dollars from the federal government allotted for the sales credit to purchase old gas guzzling cars, is close to being depleted. Instead of giving a long term buy rating, Cramer said sell AutoNation stock for now; but Cramer believed that auto dealer stocks would rebound after a pullback.
AutoNation does not see a short term trade here, but rather a significant long term improvement in the fundamentals of the industry over the next five to ten years.
This should be an "accumulate" at least; as the dynamics of the old auto industry structure in the United States rapidly change for the better. Future efficiencies in production and sales distribution will bode well for the survivors of the industry of this most recent contraction. We must remember that "Mad Money", produced by CNBC, is tailored for the "position" trader who is quick to capture profits.
Additionally, we see AutoNation as being an extremely well managed company as they have not only weathered the most recent downturn in the U.S. economy, but have managed through the crisis to show a profit for the last two quarters. Clearly Mr. Cramer did not have the next day release of AutoNation's earnings for the most recent quarter at hand when forming his opinion of AutoNation stock.
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'Buy a new, more fuel efficient car, trade in a less fuel efficient vehicle with a miles per gallon rating of 18 miles per gallon or less, and the new car buyer will receive a tax credit of up to $4500 towards the purchase.'
President Barack Obama has officially signed "Cash for Clunkers" into law as part of a larger defense spending bill. and the program puts the burden of deciding which vehicles qualify squarely on the shoulders of dealers. Vehicles being traded in must be less than 25 years old, and their replacement must get 4 mpg better if it’s a car, 2 mpg better if it’s an SUV. Again, dealers are responsible for having the older vehicles scrapped. The benifits of the program are two-fold in that the U.S. fleet will move to an improvement in fuel milage, and domestice production of vehicles will get the needed "boost" to jump start manufacturing.
The program has been very sucessful in other countries when introduced, and has provided positive results of achieving the goals of increasing car sales of more fuel efficient models, while removing older less fuel efficient vehicles from the road in order to improve the country's overall vehicle fleet fuel efficiency and reduce fuel consumption on a national scale.
...... Also seen as a boon to the struggling auto industry, the new program is expected to spur U.S. auto production and sales going forward. Larger auto dealers may expect to see an increase new car sales of up to 20 vehicles per month per dealership or store according to some sources.
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