Free Post: AutoNation’s Jackson “Going on Offense”

• Posted by ToddSullivan
• on September 24th, 2009

From an interview in Reuters…

AutoNation Inc (AN.N), the top U.S. auto dealership chain, is ready to go “on offense” by acquiring new stores and buying more vehicles as it bets that the battered U.S. auto market is headed for a long and steady recovery, the company’s chief executive said.

“We’re through the abyss. We’re through the trough. There’s no question in my mind,” AutoNation Chief Executive Mike Jackson said in an interview with Reuters.

Jackson forecast a gradual recovery in U.S. auto sales that would take the market back from near 10 million sales this year to more than 15 million unit sales over the next several years.

“We’re not afraid to buy Ford or Chevy franchises where we were in the past,” Jackson said in a wide-ranging interview in his office at AutoNation’s headquarters. “We’ve increased our orders by 50 percent for inventory. We’re doing a whole range of things as we move out of a defensive posture.”

AutoNation benefited from a decision to cut costs early as the recession took hold by cutting jobs and slashing inventory, steps that protected its profitability and balance sheet during a downturn that proved to be far deeper than expected, Jackson and other senior executives said.

But Jackson said the U.S. government-funded bankruptcies for General Motors Co GM.UL and Chrysler had removed a major risk for the industry and killed a “production-push business model” characterized by high inventories for Detroit-made products and sharp discounting through incentives.

‘NEVER BEEN MORE OPTIMISTIC’

“From my time in the auto business, I have never been more optimistic about the long term,” said Jackson, who took over the AutoNation top post a decade ago after a position with BMW. “The sword hanging over the industry is gone.”

He added: “We’re seeing that there’s going to be a gradual recovery, but there’s going to be six to seven years of open recovery.”

There really is not much new here, but, its out there so lets deliver it to you, right?

This goes to a post done here in August after Mike Maroone gave the following interview:

Bottom line is, and longtime readers know this point has been pounded home here since late last year is that recessions are good in that they clear away the fat. In the US auto business that fat has been thousands of unnecessary dealerships. Those dealers left will have larger market share and increased pricing power, both very good things. Being the largest dealer in the US, and losing only a handful of locations that will ultimately be converted to other uses (changes in brand sales), AutoNation is by far the clear hands down winner in the space.

Here is the link for the full Reuters article

Additional Reuters inteview

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