Auto sales will remain healthy, unless the Fed keeps hiking rates, says outgoing AutoNation CEO
- Mike Jackson says he'll be delivering AutoNation in good shape for his successor.
- As for the industry, the outlook for auto sales is "pretty good," he predicts.
- Until inflation really heats up, the economy is in a "perfect sweet spot," Jackson says.
Mike Jackson, who will step aside as CEO of AutoNation next year, told CNBC on Wednesday that he'll be delivering the nation's largest chain of car dealerships in good shape.
As for the industry, the outlook for auto sales is "pretty good," Jackson said on "Squawk Box," shortly after AutoNation announced his transition to executive chairman in 2019, a position he's expected to hold through 2021.
The rise in popularity of pickup trucks has raked in profits for automakers, which can act as a buffer for fluctuations in volume. The notoriously cyclical industry has seen record sales in recent years of around 17 million vehicles annually.
However, the knock-on effect of inflation showing signs of life could mean even higher interest rates, which would make auto loans more expensive.
"Once inflation breaks out, the Federal Reserve will raise rates to tamp down inflation" more aggressively, Jackson said. "But there's no sign of inflation at the moment."
For now, the economy is in a "perfect sweet spot" that could last for some time, Jackson said.
In his nearly 20 years at the helm of AutoNation, Jackson is credited with being a transformative leader, who formed a single brand and strategy around a collection of dealerships across the country. He was hired by AutoNation founder Wayne Huizenga, while Jackson was head of Mercedes-Benz USA. At the time, the idea of rolling up auto dealerships into a large network was unconventional and there were some doubts as to whether it could be accomplished.
"I like a challenge," Jackson told CNBC.
Since he took over in October 1999, AutoNation has generated about a 340 percent return for shareholders, the company said. In 2017, AutoNation's revenue rose to $21.5 billion.
During his tenure, Jackson focused the business on sales, service and finance, and expanded the dealership inventory beyond U.S. auto brands into a three-way split between domestics, luxury cars and imports.
He has also been a strong advocate for the automotive industry on issues around fuel and during the 2008 financial crisis, when large U.S. automakers like General Motors were struggling.
Jackson told CNBC that he began thinking of picking a successor a few years ago.
"In 2019, I'm going to be 70 years old and have been CEO 20 years," he said. "That would be a good time to hand the baton to a new CEO."
The AutoNation board has hired executive search firm Spencer Stuart to find a successor to Jackson. Both internal and external candidates will be considered, the company said.