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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In an early morning interview on CNBC, Mike Jackson Chairman and CEO of AutoNation – the largest auto dealer in the United States - sat down with Becky Quick, Joe Kernan, and Carl Quintanilla of Squawk Box; as well a Phil Labeau, the CNBC auto specialist - to discuss the complaints from U.S. auto dealers about the delays in the payment of the rebates promised to them by the federal "Cash for Clunkers program.
The following issues were highlighted in that…
- From a quick survey by CNBC of about 12 car dealers across the United States, none have received their rebates.
- Four out of every five claims were being rejected for minor paperwork errors
- Many claim forms have been sent back to the dealers to be re-written.
The U.S. Department of Transportation has made a recent statement as a result of these complaints from the auto industry in that .....‘that they are now committing enormous resources and are working overtime to process the applications both quickly and responsibly, while getting rebates paid for complete and valid deals.'
However, the good news for the economy is, that as a result of the "Cash for Clunkers "program; General Motors has boosted car production by 60,000 vehicles and the program has also spurred significant production at the other U.S. manufacturers as well. The total dollar value of the program has been approximately 1.5 Billion dollars in transaction revenue for the industry as a result of 411,000 "Cash for Clunkers" transactions, as of 9-18-2009; indicating that this program has been a resounding success.
But fraud can easily take place and the government does have a responsibility to ensure that only the proper and valid amounts of rebates are returned to the dealers. Consequently the administration of such a vast nationwide program is tedious.
When asked for a dealer perspective of these issues; Mike Jackson responded in that these details are accurate, but he believes that the 'Department of Transportation will come through within in the next few weeks and will clear the paperwork log-jam that has developed .... 'however it will take time'. "The government is worried about fraud; and rightly so." Mr. Jackson concludes.
Auto Nation is currently owed about 45 million dollars in federal rebates as a result of sales within the "Cash for Clunkers" program to date , but the program is working on every level Mr. Jackson contends..... "Cash for Clunkers"has been so successful, and the response so overwhelming, that the resources for for the administration of the program have been strained.'
Mr. Jackson's view is that as of now..... "A drowning man has just been thrown a life preserver" ...and "we cannot now complain about the color of the preserver."…..
'This program is working on every level and has been an overwhelming success. But because of this success we are now seeing these difficulties. Mr. Jackson went on to say that 'in a few weeks the problems in the program will be resolved. The Department of Transportation was not prepared for the significant and rapid success of the program; but it is now adding rmore resources every day to fufill its comittments to the program.'
Nevertheless, 'They are correctly worried about fraud and we must understand that the requirements of the program need to be met appropriately. The Department of Transportation is being absolutely perfectionist in its administration of the program as it is distributing taxpayers money for the rebates. The rule book for "Cash for Clunkers" is 136 pages long, indicating how complicated the program is to administer. However, though there are some logistical hiccups at the moment; Mr. Jackson believes that the Government will get it right, and the money will finally begin flowing to the dealers.'
Mr. Jackson went on to say that, 'It is important to note the commitment of the auto industry in the fact that the U.S. auto dealers have advanced the money for the rebates of the program to their customers, and are now waiting to be reimbursed.' But this is a commitment that we have made in the best interest of the country.'
Doug Kass of Seabreez Partners Management Inc. - and famed market investor, asked Mr. Jackson " ...if the "cash for clunkers" program is pulling sales from the future; particularly from the spring of 2010, and consequently there will be a significant drop in car sales at the end of 2009.
Mike Jackson explained, that his observation is that there is no question that the program has spurred a" incremental" increase of auto sales to customers that would not normally have bought a new car. 'These conservative car buyers have come into the dealers to trade in a 10 year of domestic car as a result of the program. These customers have maintained good credit histories and are easy to finance if necessary.
'Beyond this, the Cash for Clunkers program has stimulated "dovetail" sales from the customer who was qualified for the program only marginally, but purchased a new car regardless. And though program has lifted sales to higher levels of about 12.5 million units per year, it is not unreasonable to expect that current sales rate will eventually subside to a more sustainable but yet higher level than the 9 .5 million unit sales rate that resulted from the collapse of Lehman Brothers last year'.
' It is now safe to come back into the market. The worst is over.... Mr. Jackson contends. The program is now driving traffic beyond itself, and this is exactly what a stimulus program is supposed to do.' 'Additionally, the U.S. is achieving a full 10mpg improvement in fuel economy "on paper" for each sale, as a result of the program. But actually the mileage improvement could be as high as 15 miles per gallon which would be exceptional.
.....To conclude, Mr. Jackson believes that 'the "Cash for Clunkers" program is currently experiencing some logistical problems. However, it is undeniable that this program has been a resounding success on every level'.
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Appearing on local NBC in South Florida, Mike Maroone - President and Chief Operating Officer of AutoNation, - the largest auto dealer in the United States, addressed questions about the current state of U.S. vehicle production, design, and engineering quality. He also speaks about the most recent structural changes occurring in the U.S. auto industry, and how they will affect strategic planning for companies in the future.
Mr. Maroone is convinced that the manufacturing quality of the American auto industry is "back on track" and he explains that the newest Ford and GM models are of the highest quality, which is on par with any other cars or trucks built in the world. Mike Maroone went on to state that, in his opinion, the choice of Frederick A. (Fritz) Henderson as the new CEO of General Motors was an excellent choice. ...and that [Fritz] he has done a good job in steering the company through its most recent crisis. 'GM is now a very healthy company and is poised to compete on the world stage.' ....The car manufacturer additionally has fantastic products in the pipeline such as the new Camero and Equinox.'
Looking at Ford, 'they have fantastic pipeline of products as well,' Mike Maroone continued, ‘and their product cycle is very fast and efficient from… " the artist's conception" …"to the road"…. with a high level of engineering and manufacturing quality' .... 'Ford has done a wonderful job with the Ford Fusion, the Edge, and the Escape models…These products are fantastic.'
Ford also has an advantage over GM and Chrysler because of not having to accept government money to maintain operations. Though they did have a significant debt burden to address, they have done a good job in restructuring this debt and Alan Mulally, who did not come from the auto industry, has made all the right moves to improve the future of the company both financially and strategically.‘
Mike Maroone believes... "A lot of credit needs to be given to the Governemental Auto Task Force and the Obama administration for the progress that has been made recently within the domestic auto industry. "Without the efforts of the administration, and all involved, GM and Chrysler would be gone".
'Also the "Cash for Clunkers" program has been a resounding success, and this will continue to provide a stimulus for domestic auto sales and production. .....'There was a catastrophic lull in sales because of financial devastation experienced last year and the bankruptcies of General Motors and Chrysler earlier this year....Mr. Maroone continued; ..... 'as a result of the programs recently put in place, the "purchase consideration" by our potential customers seems to be returning slowly to our dealerships.' The "Cash for Clunkers" program has catalyzed the market environment markedly and 'the selling environment for the dealers has stabilized" hopefully conditions will continue to improve.'
..... Because of the significant improvements from the financial turmoil that befell the U.S. financial markets last year, and AutoNation's ability to weather this most recent downturn, the company has begun to ramp up its orders for new cars and trucks .....AutoNation is also "on the acquisition hunt".
The conditions for opportunity are beginning to outweigh the recent "risk environment" for the company, Mike Maroone concludes, ....consequently, AutoNation will be moving forward.
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