The Cash for Clunkers program has been vital towards resuscitating the US auto industry and should continue, AutoNation CEO Mike Jackson told CNBC.
As the government program burned through its $1 billion allocation in just one week, Jackson said in a live interview that Cash for Clunkers quickly brought customers back into auto showrooms. With the economy struggling to regain its footing, he said the government needs to keep these types of stimulus programs going.
"There's no question the stimulus program is a kick start, that it's extremely beneficial to the industry and the overall economy," Jackson said. "I believe this economy is not really going to find its legs until you have a recovery in housing and a recovery in automotive. Certainly Cash for Clunkers is an igniter to get the automobile industry moving again."
AutoNation reported its profit fell 29 percent in the second quarter.
Cash for Clunkers allocated $1 billion to provide $4,500 rebates for consumers to trade in older vehicles for newer more fuel-efficient models.
The allocation was supposed to last until Nov. 1, but dried up as drivers sought to take immediate advantage of the program. The government said Thursday it was suspending the program, possibly as soon as today.
There was no word as to if and when the program will resume.
At the AutoNation dealership chain, customers have both been flocking in to get a deal in the Cash for Clunkers program even though the average credit score for buyers is 700, Jackson said.
"With it is a higher requirement of equity or down payments, and customers are struggling to reach that higher threshold of down payment," he said. "But maybe in the long term having more equity in the vehicle is prudent. We're also seeing leasing gradually come back into the marketplace and that will be a big help also."
Jackson expressed confidence that the program will continue.
"The billion was always thought about as a first tranche to see what would happen," he said. "Since the traffic is a very high quality of people who genuinely need new vehicles ... it's win-win everywhere."