The US automobile industry is effectively bankrupt as it tries to navigate the way out of its worst ever crisis, but the industry will emerge stronger and General Motors should follow Chrysler into Chapter 11, Mick Jackson, chairman and CEO of AutoNation, told CNBC Friday.
“I would describe this as the worst of times for the automobile industry and it will be the best of times. We’re literally witnessing the reinvention of the US automobile business,” Jackson said.
“It’s painful in the near term, it is absolutely the right step for the long term,” he added.
The entire business model that the US auto sector is based on is bankrupt and in the process of being extinguished, according to Jackson.
The painful process also extends to the retailers such as AutoNation, which is the country’s largest dealer of Ford, GM and Chrysler.
“There’s too much capacity at retail, there has been for decades,” Jackson said.
Chrysler’s bankruptcy proceedings are on the fast track and are relatively on schedule, according to Jackson, as the company’s bond holders have now "caved."
GM should follow Chrysler down the bankruptcy route in order to come out in a stronger position, he adde.
The auto task force is managing the situation well, but the government has no interest in staying in control of the beleaguered sector for longer than it has to, Jackson said.
- Watch the full interview with Mike Jackson here >>>