AutoNation’s Mike Jackson at World Congress
And yes, we’re talking about the CEO of Autonation, not the one-glove guy. Jackson’s keynote adress to “fellow survivers of 2008” at the Automotive News [sub] World Congress was TTAC-ish enough to be dubbed a “truth-serum” speech by AN’s David Sedgwick. Accompanied by the Laurel and Hardy influenced powerpoint presentation above, Jackson breaks down the great downturn of 2008 with wit and insight. He blames captive lenders like the “General Motors Rejection Corp,” and states that for 95 percent of the market, the price of gas determines the kind of vehicle they want. Check out the changes in captive lender approvals and the $10k swing in Prius residuals over the last year for some compelling evidence that he’s right. Listen to the whole speech below for a concise overview of the year that turned an industry on its head.
For that small, but very vocal minority that do not get it, please repeat the statement in the above article “for 95 percent of the market, the price of gas determines the kind of vehicle they want” over and over until it sinks in. REALLY sinks in.
Give CAFE a 30-year head start and it still can’t beat what TAX can do in six months to rev up automaker’s fuel economy programs, move people into more fuel-efficient vehicles, and reduce overall fuel consumption.
Right on gas taxes, but wrong on lending (what would you expect from a dealer – responsible lending isn’t good for sales).
In the “Auto Loans” slide the Aug ’08 loans add up to 215%, and the Nov ’08 loans add up to 120%. Never trust a car dealer’s math.
I do not see anything very truthful about a convention full of dealers patting themselves on the back for bringing the Detroit automakers to bankruptcy and now living off of poorly underwritten, government subsidized floor plan loans.
What a terrific slide show! More powerful than a blown Hemi. My congratulations go to the staff member(s) who put it together.
And I loved the Laurel and Hardy photos. True comedic geniuses. I immediately added some of their DVDs to my NetFlix que. They made a movie that had a line of T’s plunging off a high bluff above the beach. Anyone know which flick that was? And there was a film in which they struggled to move a piano up a long flight of stairs. That’s a good metaphor for government trying to boost the economy.
no-slushbox, I figured the percentages in the “Auto Loans” slide refer to the acceptance rate for the respective categories of would-be borrowers.
50merc:
Good call, at least the numbers add up now. Still, he uses himself as the source, and the numbers are pretty meaningless without knowing the debt to income ratios of the borrowers and other underwriting criteria. Also, who knows what this guy considers “prime”. And there is nothing wrong with someone with “prime” credit being rejected on a payment they can’t afford.
Also, I can see a lot of loans falling apart in November ’08 simply because more borrowers were upside down at that point.
Re:“for 95 percent of the market, the price of gas determines the kind of vehicle they want”
At the present time the average price of fuel in Canada is about $3.20 per U.S. gallon vs. average in U.S. of approx. $1.80. At that price, many Canadians think that gas is pretty cheap, compared to what we were paying. Imagine what would happen if suddenly the U.S. price was raised via taxes to what Canadians are paying….It would almost fund the bailouts, plus people (95%) would obviously think about fuel efficiency a bit more when they finally do get around to make that purchase.
Thanks for posting this speech. Fascinating to hear the dealers’ perspective.
Those were some hilarious comments about the Koreans at the end. We can pretty much tell he would be against any near-lux brand. “You tell me what is a Mercury?” was pretty telling. Not in love with Acura or Infiniti either. You could probably several other brands to that list.
Bar charts and graphs that start with a number greater than zero at the bottom immediately make me suspicious.
50merc:
As to the L&H films, the photo shown is from Two Tars, released November 1928. This was a silent two reeler during the last 6 months or so of silent Hal Roach films. Laurel and Hardy (as well as Our Gang – The Little Rascals) went to talkies in May ’29. Their first 4 or 5 talkies were sound on disc films before they went to sound directly on film using an optical sound track which became industry standard. Until 1979, the discs were thought to be lost, so those first sound films were shown as silents until the discs were located at MGM studios.
There were two different stairs films, using the same staircase of 131 steps in the Silver Lake district of LA, located between 923 and 937 Vendome Street. They’re still there today. Their silent version was called Hats Off, released in November 1927. This is now a “lost” film with no known surviving prints. The other one, which I personally have a VHS copy of, is called The Music Box, released in March 1932. Yes, it’s sound and very noisy – and funny. It’s a 3 reeler (roughly 30 minutes) that won an academy award in 1932.
If you haven’t noticed, I’m an old film geek, especially the old Hal Roach comedies.
BTW, Oliver Hardy’s signature line to Stan Laurel is, “Here’s another nice mess you’ve gotten me into”. That gets misquoted an awful lot.
Now, back to cars.
He said it all in one single statement; the USA does not have a coherent national energy policy.
Great link, thanks Edward Niedermeyer.
That is indeed an interesting presentation. Few CEOs can speak as well about their companies and their industries.
Ford CEO Mulally’s presentation was fluff where this one is substance. Maybe Mulally could do something like this too if he was slotted into the program differently. But I doubt it. And can you imagine Wagoner or Nardelli doing this? I cannot.
Still, I think his ideas are off target. I do not think the key to stabilizing the housing market is to drive interest rates below 5%. Nor do I think that car sales will rebound as people with poor credit can once again get car loans. Or to put it another way, I do not think that the car sales that have been lost are due to the lack of financing.
His ideas about the stimulus are pretty strange, too. The more the better, huh? No problem spending a trillion dollars? Okay, let’s make it two trillion. Or three trillion. Or ten trillion. Inflation? Not my worry.
dastanley, thanks much for the L&H info!
PeteMoran: “He said it all in one single statement; the USA does not have a coherent national energy policy.”
Yes, it’s not coherent, but I like to say we do have an implicit policy: to muddle along in an uneasy balance of power between political factions, none of which can impose their view upon all others. This is not unusual in our messy, democratic, porous and diverse, continent-size, federal, checks-and-balances system wherein it is easier to block change than to implement it. Often it takes a crisis (real or perceived) to overcome inertia and impose a universal policy. The late but unlamented 55 mph national speed limit is a good example.
…an absolute MUST listen. You came for the truth about cars, here’s a platter of it.
Take-Aways:
1) Car dealers sell a product into a market where only 10% can sit down and write a check for it. For everyone else, that cost must be spread over 3-4 years.
2) General Motors and Chrysler auto financing arms are, for all practical purposes, out of the auto financing business. This is hugely negative to 90% of the GM and Chrysler new car sales.
3) Ford auto financing arm is still in the business of financing autos. Ford dealers can much more readily turn that loan app, present in 90% of new car sales, into a sale. Ford is able to move more units because of their ability to finance their cars, not necessarily because of a better product mix or higher quality.
4) Floor traffic at AutoNation is at about the 12.5M sales range but actual sales trend is far lower as 90% of the new car market is taking a heavy hit with lack of financing.
5) Car quality is just fine across the board. Comparing a Malibu to a Camry or Accord is pointless. Compare any new car with the POS they drive in with and this is where the sale is made.
6) For 95% of the new car buyers, the price of gas dictates the car they want.