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-You put-- Okay, work with me here.
If you put a Porsche, a Mercedes and a Ford Fusion all next to each other like we had on the screen.
Guess which one car buyers are asking for the most? We don't have to guess.
We have the man who is selling them all here in the US.
AutoNation, the nation's largest auto retailers [unk] profits sour 14 percent year over year.
That's another record quarter for them.
So, which car and which truck models are really driving those profits? -Let's ask Mike Jackson, the chairman and CEO of AutoNation.
Mike, lovely numbers once again, I don't wanna sound like a broken record because you guys have crushed it quarter after quarter.
But, let's get to that question because I wanted to get a little more granular about what drives your numbers.
We just showed the Porsche and Mercedes and a Ford Fusion.
Which one is the car of choice when you have people walking into your dealers? -Well, I have to say in principal industries sales are outstanding.
You know, we originally forecasted mid 15 millions for this year-- at the beginning of the year raised a lot of eyebrows.
But here, the halfway point I can say with full confidence that number will be achieved if not on the high end of the range.
We really think about the market in 3 segments in our portfolio.
We have the Detroit 3 and here I have to say the resurgence in pick-up truck sales is phenomenal.
And here the F150 is the perennial leader but GM is out there with the all-new Silverado and Ram is Truck of the Year on our pick-up truck sales are up 20 percent across the enterprise.
And these are not fashion statements anymore.
These vehicles are the backbone of the workforce of America.
So there's a lot of confidence about the state of the economy and these trucks have gone to construction sites and to energy sites, where fracking is being produced.
If I move over to the car segment, the mid-sized sedan is red-hot and interesting.
Ford Fusion is absolutely flying out of the showroom including on the West Coast in California.
So, this has been a bastion of strength for the Japanese and the-- don't get me wrong.
The Japanese-- they are with great products and-- -Right.
Well, we also have the Toyota Camry thing quite Mike-- -This Camry and Accord-- -The Toyota Camry looking very healthy as well.
-Yeah, they're right there.
Right there but Ford has done a phenomenal job with the Fusion and for-- also it's up 30 percent to just to give you some idea.
And it's amazing.
-And then you have the Germans.
And they make a very unique vehicle, a very differentiated from styling to content to driving dynamics.
It has, shall we say a differentiated price, also.
And, you know, we are the largest seller of Mercedes Benz here in the US and we're right up there with BMW Porsche and Audi.
And, it's interesting that the premium luxury segment across the board was the first to recover coming out of the disruption of '08 and '09 and that business has been strong ever since.
Well, let me get to fuel economy because we had oil today hitting a 16-month high.
You and I have often talked about the freak out level of a gallon of gasoline.
Back in February, I asked you and you said Americans and consumers would freak out at $5 a gallon.
Do you amend that right now as we look at-- I think our above gasoline is pretty much flat on the day to day and that is the wholesale part.
But in New Jersey, it's just below $4 a gallon even the higher fuel opportunities there.
So what-- has it changed from $5? Has it going down a little bit that if we start to hit $4.50? -No.
The number is $5 Liz.
Yeah, the national average for gasoline right now is right around $3.60, something to like that.
-The customers have adjusted to it.
I'm not saying they like it but they've adjusted to it.
And one of the reasons is that the auto industry has found an answer around fuel economy and why hybrids and electrics are interesting or less than 5 percent in the business.
The answer came with the new innovative technologies of direct injection turbo 89 speed transmissions that are all integrated with advanced computer systems to manage the whole thing.
-And so, why-- when I scratched my head as why is petroleum at the price it is, because miles driven have not going back to their peak of '07 fuel efficiency is increasing dramatically.
In the production of oil in United States is going through the roof.
So you tell me why petroleum still $100 a barrel.
-Well, I agree with you but you've been the one telling us, and let me go back to one of the first thing you've said that we would see auto sales overall in this country hit about 15.5 million-- your outlook for that number by the end of the year if we start to see a meaningful jump in interest rates.
Now the fit doesn't control mortgage rates or auto-loan and auto-lease rates but they sometimes do react to a better economy which is sort of what we've seen in a slow but it's a natural pace.
So, what will happen to that number of auto sold entirely if we start to see higher interest rates? -So, first and important point.
We're very different than housing or mortgages.
We are on the short end of the U-curve for inventories.
It's all short-term rates and for our customers, you're looking at 3 or 4-year money to fund those loans.
So our rates have not moved when I owed.
And I think as, the begins to tape or later this year if indeed they do that, I think it's going to affect more 10, 20, 30-year money than-- -Okay.
-Let's say 3, 4, 5-year money.
Now, in a year or two, when this economy really is growing at a much stronger pace than it is today and rates begin to normalize from their extra-ordinary lows today, well you give me a strong economy.
I'll take normalized rates.
I'll take that deal any day.
Sold-- we'll be fine.
Well, your stock is down 1 percent.
You know, what investors are saying.
What have you done for me lately? They're so used to this record after records.
It's good to see you Mike.
Thank you very much for joining us.
-Liz, it's good to see you.
-Mike Jackson, AutoNation chairman and CEO of the Ford Fusion.
How about that? Closing***CUT DICTATION***
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