'Clunkers' Put Cars on Road to Recovery: AutoNation CEO
Cash for Clunkers was "one of the most successful stimulus programs of all time" that has helped the auto industry on its road to recovery, AutoNation CEO Mike Jackson told CNBC.
"The worst is over," Jackson said in a live interview Wednesday. "This was a necessary shot in the arm for the industry. We're on the way to a gradual recovery."
The four-week period during which the "Clunkers" program ran yielded 700,000 sales, he said, nearly 10-times the normal volume for that period. Under the program, car owners were able to take their gas-guzzlers to dealerships and get credit that ran up to $4,500 per vehicle.
But the industry is rebounding on its own, Jackson said, and the program only accelerated the process.
The industry is now tracking at an annual sales rate of 10.5 million cars, a big jump over the second-quarter projections of 9.2 million. Jackson said that number could reach as high as 11 million for 2010 and up to 16 million four years out.
At AutoNation specifically orders for September increased to "well over 20,000 units," he said, and an even higher number is expected for October.
"We're not the only ones," he said. "Every dealer I've talked to has dramatically increased their forward orders."
The only down side to "Clunkers" has been the difficulty dealers have had in getting reimbursed by the government. Jackson estimated that about $3 billion is sitting on dealers' books in expected payments for the trade-in rebates.
"Dealers are a little bit nervous at the moment," he said. "We're owed $55 million at the moment, which even for us is a nice piece of change that we'd like to have. There's no question in my mind that we will get the money."
"The government is being very fastidious to make sure there are no abuses whatsoever, and you only get the money if you really earned it," he added.
While Jackson remains optimistic about the industry's recovery, he added that consumer weakness will keep the pace in check.
"I think the recovery's going to be gradual because credit remains an issue," he said. "The consumer remains scarred, and it's going to take some time."
(An earlier version of the story misidentified Jackson's company.)