Car Industry Still a Bright Spot: AutoNation CEO
Despite problems in the U.S. economy, including persistently high unemployment , the automotive industry is a bright spot that gives AutoNation CEO Mike Jackson confidence.
He has reason to be confident. Earlier Wednesday, the nation's largest dealership chain reported a 5 percent jump in first-quarter profit, thanks to more people coming in to replace their junkers with more fuel-efficient cars.
AutoNation said sales of new vehicle units, AutoNation's largest division, increased 10 percent in the quarter and were up 8 percent in stores open at least a year, a key retail metric that excludes newly opened or closed stores. Even the company's used vehicle revenue rose more than 10 percent.
Jackson, who has forecast that 14 million vehicles will be sold by the industry this year, is confident enough for the company to repurchase 9 percent of its shares "based on the fact that the automotive industry is recoverable and solid in what’s an overall mixed picture in the economy, and I’m confident in our ability to perform."
Jackson did not mention his forecast Wednesday, but he did detail his concerns about the economy.
"Until the housing situationis straightened out, you can’t really have a strong, vibrant recovery," he said. "So there’s risks that are still out there."
One risk that turned out to be a benefit was the prospect of $4 a gallon gasoline, he said, but that only drove more people into his showrooms for those fuel-efficient American and foreign cars. The company reported a 16 percent unit sales increase in domestic cars and a 14 percent climb in luxury cars.
The gas price "turned out not to be a risk, but rather in positive," Jackson said. "How often does that happen in life and in business?"
—The Associated Press contributed to this report.