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New Car Sales Are Back in Gear: AutoNation CEO

The fundamentals of the automotive business are strong, and sales of new vehicles have hit a trough, AutoNationCEO Mike Jackson told CNBC’s “Squawk Box” on Thursday.

Customer at an auto dealership.
AP
Customer at an auto dealership.

“There is a genuine dramatic replacement need,” he said, noting that the average age of cars on the road is up to 11 years.

“People either have to spend a lot of money fixing the car they have or use that money to make a down payment on a new car,” he added. Financing is also fully restored, Jackson said.

Jackson said AutoNationhas hit the trough for units following the collapse of new vehicle sales in the past several years. “The headwinds are turning,” Jackson said. (Related: 10 Fastest Cars of 2013).

That auto demand helped AutoNation overcome what Jackson described as “a very difficult and painful economic environment.” He also said there are still difficult times to go through with the presidential election looming and politicians making little headway in resolving the “fiscal cliff.” The fiscal cliff is when a host of tax cuts expire and automatic spending cuts kick in at the end of the year.

For the second quarter, AutoNation posted adjusted earnings of 66 cents per share on a 17 percent increase in revenue. That was 7 cents ahead of analyst estimates.

Jackson attributed the strength to new vehicle sales. “We significantly outperformed the market,” Jackson said. “The market was up 15 percent. For our units, we were up 29 percent.”

Questions? Comments? Email us at consumernation@cnbc.com.

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