AutoNation CEO: Cars Are a Bright Spot in the Recovery
AutoNation CEO Mike Jackson on new car sales and gas prices.
- Duration 6:20
- Date Jul 19, 2012
AutoNation CEO Mike Jackson on new car sales and gas prices.
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That sells all those cars automation reported record earnings this morning and today did you see this the stock hit another all time high.
So what does that tell you about the auto recovery joining us now from Fort Lauderdale.
Live AutoNation chairman and CEO Mike Jackson great to have you -- on the program thanks -- joining us.
There is always a pleasure.
All right look I look at these numbers domestic new car sales up 17% US imports up 44%.
New vehicle sales looking so unbelievably impressive.
Premium luxury up 16%.
At a time when the economy at least when you listen to a lot of people not just here but another business networks in the -- want to saying.
Ever -- shutting their wallets what are you seeing with the granular data here that indicates that people are ready to spend at least -- cars.
Well Liz is no question the US economy has a very tepid fragile recovery.
I it's not growing fast enough to deal with the jobless situation there's a lot of pain out there.
But automotive is a bright spots -- in the economic recovery and we had some fundamental drivers that are very powerful first.
Either in the crash of -- wait no -- I'm in autos we had a -- -- sales fell.
Fell from a seventeen million selling rate down to ten -- -- sales came practically to a standstill that pushed up the average age of cars in America.
Are you ready for this -- eleven.
Year except at some consumers -- did do something if they still wanna get the work they got up by a newer car or a new car.
So they come in -- CS and we have exciting new products from the manufacturer.
What dramatically improved fuel efficiency without having to trade -- size and speed that's very different than the past and finally we have great financing available.
Because guess what during the crash everybody kept -- for the car payments all the banks -- -- into automotive and those three factors combined.
The really drive -- automotive recovery I suppose they -- -- their car payments but -- their house payments so that's certainly good news.
But looking well and we look -- just look at first list on that point look at look at the state of Florida.
You know is -- you stop making your house payment it's like hit the lottery can live for free for two or three years I I think he's what he's got life in her car payment work.
-- can't work if they've already figured it out we're coming to get the car in sixty to ninety days.
What's shocking is the unemployment rate as it correlates to the car sales of new car sales -- with California.
Mean these are two of the states that are the most hard hit.
Which -- -- believe that we strong car sales but let me now get quickly to what is the breaking news today and that is higher oil.
Mike we're watching the situation very closely in Syria where -- saw this.
Is running apparently according to reports away from Damascus because the fighting has gotten so severe three of his top lieutenants were killed yesterday.
We're looking at higher oil and real tension at what level.
And I know you know the level because you are one of the smarter guys on energy at what level.
Will oil hit that we'll start to put a dent and hurt you or I guess SUV -- light truck sales which is it.
98 is that a hundred dollars a barrel.
Well let's make it -- any consumer and number and I think that freak out number.
And is now around five dollars a gallon we saw gasoline in the first quarter run up almost four dollars a gallon.
And -- we plowed right through that contrary to what happened in no way so every time we have one of these spikes.
These these set point adjusts.
And I I think it's now in the high -- if not five dollars a gallon before consumers freak out.
And the industry is much better for shared.
Today that we were in 084.
Run up in gasoline prices.
And it's interesting that the technology that -- carrying the day is not hybrids it's not electric fish traditional technologies.
That have made tremendous advances whether it's a transmission that -- now has eight or nine speeds on internal combustion engine which has been downsize.
But gets a performance back with Turbo charging and direct injection so we have out.
Winning solution for the.
-- today I just wanna ask you because you know a large portion of your stock's float is being shorted.
And and I guess the question becomes it's about 21% of the flipping -- we topped analyst Mike and they say look.
The PE ratios a little rich around twenty for trailing fifty for forward.
But but more importantly the share repurchasing plan.
Thirteen point seven million shares a hundred.
What was a 137 billion shares and then and then you're looking at and in the aggregate purchase price of about a 126 million.
It is -- trick that's gonna fail to work at a certain point because the stock is now down today although hitting an all time -- Not -- in the stocks will go up and down the I view it this way.
-- first I'm very happy to have long term.
Investors in the company.
ES elementary Lampard -- and I -- been together.
Twelve years now only owns 55% of the company might Michael -- investing for Bill Gates in I've now been together for a decade.
Owns 15% of the company insiders own 73%.
Of the company.
Long term shareholders own.
90% of the company and we've.
Bought back in.
Our share -- went from 530 million down today to around -- 125 million.
At an average price of sixteen.
For stock is now trading at forty so I think our strategy has created.
Tremendous shareholder value but it's something we we view every day depending upon.
The valuations of acquisitions.
That is the price of the stock.
Capital allocation first dose of the existing business -- -- opportunistically.
Look at -- acquisitions and share repurchase and I think we've handled that.
Pretty well over the years and I know some of our viewers are are in that same company -- shareholders so thank you for speaking with us Mike good to see you.
There's always a pleasure to be would you automation chairman and CEO Mike checks.