As General Motors filed for Chapter 11 bankruptcy protection on Monday, AutoNation CEO Mike Jackson offered insights on what impact it would have for the auto consumer, car dealerships and more.
Buyers There, Credit Not
“First and foremost, the American dream lives on. We still have more demand and traffic in our showrooms today than we have credit available… We have people coming in wanting to buy vehicles and there’s not normal credit available. I’m not advocating the return to loose, easy credit, but there needs to be a normalization of credit.”
Darwin’s At the Door
“Darwin’s at the door for automobile dealerships, particularly representing the domestics and it’s the combination of this dramatic fall in volume… And 13 hundred dealers have gone out of business voluntarily over the past year and several thousand more will go out through this bankruptcy process with Chrysler and General Motors.”
There's Bankruptcy And There's Bankruptcy
“There’s bankruptcy and there’s bankruptcy… whether you jump out of a plane with a parachute or without a parachute. If they had gone into bankruptcy the fourth quarter precipitously, the customer would have fled and these companies would have gone out of business and they would have been liquidated. But, with a government sponsored bankruptcy with the president of the United States going on television saying it’s a good time to buy a car and if you do, we’re going to give a warranty, that’s a different thing. The traffic in our Chrysler showrooms has gone up since bankruptcy because we had certainty that they’re not going out of business… We were looking at the fourth quarter at a situation of an industrial Lehman Brothers.”
On Monday, General Motors filed for Chapter 11 bankruptcy protection.
Under a government-backed restructuring plan, the Obama administration would take a 60
percent stake in the newly-formed company made up of GM's most profitable assets.
The UAW would have a 17.5 percent stake, the Canadian government would own about 12 percent and GM bondholders would receive about 10 percent.
More Automotive News on CNBC.com:
- GM Files for Bankruptcy, Chrysler Sale Cleared