AutoNation's Jackson Praises Death of Production Push
DETROIT - The practice of building too many vehicles and pushing them on dealers and consumers almost killed the domestic auto industry and should never be repeated, the head of the nation's largest dealership group said today.
Mike Jackson, AutoNation Inc. CEO, likened the production push approach practiced by the Detroit 3 for many years to a vampire sucking blood from the domestic auto industry. He said companies should be careful when adding capacity, and flexibility should be built into production plants, Automotive News reported.
“It would have been a tragedy and travesty had the American auto industry been swept away,” Jackson told the 2011 Automotive News World Congress. “Flexibility is the key to going forward.”
Jackson said the problem was that all costs were fixed and that the factory, dealers and labor unions shared the blame. He was particularly critical of retroactive, stair-step new-car incentives that factories offer dealers for reaching certain sales goals.
He said the incentives harm customer loyalty because they lead dealers to resort to irrational pricing in order to report sales to the factory and win the incentives.
Instead, he said, vehicle prices should be set closer to transaction prices. Then incentives should be used to fix a specific problem or manage the life cycle of a product within reason.
Jackson, who described himself as a Republican capitalist, praised the bailouts of General Motors and Chrysler, saying the federal government through its auto task force was the only entity large enough to fix the industry's problems. It killed all industry sacred cows and “no one was spared and everyone was treated unfairly.”
He predicted the industry would sell 12.8 million vehicles in 2011, with sales picking up throughout the year and coming closer to a 13-million rate by year end, aided by an increase in subprime lending and leasing.
More Industry

World EV Adoption Set to Grow
A new report says the segment, despite recent setbacks in some regions, is poised for acceleration as many countries look to reduce pollution.
Read More →
Black Book: Weekly Market Update
Wholesale automotive auction business stayed steady last week as bidders encountered lower prices, analysts observed.
Read More →
Pricing Transparency Drives Purchase Consideration
An annual study by JD Power found that clear pricing matters to consumers on automaker websites, so much so that it increases their purchase consideration.
Read More →
Black Book: Weekly Market Update
Used-vehicle market depreciation was the prevailing story in the wholesale market last week.
Read More →
Smaller Is Looking Better
A growing number of Americans in the market for a new vehicle are opting for more affordable options, not waiting for market stability to bite the bullet.
Read More →
U.S. EV Market Slowly Stabilizes
U.S. electric-vehicle interest is slowly stabilizing since a major dip in sales after last year's end of the federal EV tax credit, and hybrids remain the leading electrified power train.
Read More →
Global EV Market Entering New Phase
Automakers are making investments to lower battery costs and optimize production to meet changing consumer needs.
Read More →
Black Book Weekly Market Update
The holiday weekend, not surprisingly, put a drag on wholesale automotive activity last week, analysts observed.
Read More →
Auto Affordability in Context
Cox Automotive points out the complex circumstances that have led to eye-popping vehicle prices.
Read More →
Black Book: Weekly Market Update
Automotive auction inventory increased last week, giving choosy bidders even more leeway.
Read More →