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Very special guest with me now -- is the chief executive of the largest automotive retailer in America so when you see that.
Chevy Tahoe sales are down Mike Jackson the CEO of automation -- -- you know joining me now to discuss the latest auto sales data and ever rising gasoline prices.
Jackson good to see Mike.
That is how you this afternoon well look diesel prices jumped eleven pennies today we also had our Bob gasoline the reformulated gasoline wholesale price jumping as well.
Crew back up five dollars today.
You what as the largest auto dealer in the nation.
What are you doing differently at this point.
Well we yes certainly have a trifecta situation in at the moment we have a housing depression.
An absolute credit prices.
And -- gut wrenching.
Adjustments at four dollars a gallon gasoline.
At three dollars a gallon and gasoline me to consumers' mindset was that this was a spike that it would pass in prices would go back down.
At four dollars a gal we have that historical shift in consumer behavior I would say a structural shift in consumer.
Behavior and a stampede towards fuel efficiency so indeed it's a lot for us to manage through -- will find a way.
Well for a guy who makes his living selling all kinds of cars it's interesting to hear you say that -- a lot of consumers saying what is he talking about it's not good to have four dollar gallon gasoline but.
Tell me your best sellers at which which dealerships are doing -- the best business at this point.
-- Well I should point out that clearly what America's been doing for the last twenty years was unsustainable.
As we improved fuel efficiency.
And guess remains -- that cost per mile driven declined dramatically.
People move further away from where they work.
They have a longer commute and they wanted a bigger more comfortable vehicle with a longer -- so you put it altogether.
Household miles -- and went up by 40% the size -- home one up by 30% of vehicles heavier by 30% men 40% faster.
So just improving fuel efficiency.
As you hear Washington asked us to do as an industry is not gonna get it done.
How we got to four dollars a gallon is completely wrong.
Through high -- petroleum prices than we would have been much better to follow the European model increase taxes on gasoline -- get the conversation.
Conversation going and gradually.
Reduce our dependence on imported oil we -- be sitting here with a barrel well over a hundred dollars.
A barrel Wallace the free market kind of works its way through the Washington notwithstanding.
To are your Prius dealerships I don't think I I -- -- I disagree -- that it's not a free market at all.
You have are cartel in OPEC and also in the last ten years.
Petroleum has been nationalized around the world is now controlled by com.
My country's not companies so you can't talk about a free markets and -- Alex did -- control of Washington to drop dramatically drive down the price of petroleum.
You know we're now exporting 500 billion dollars a year capital and the US to pay for imported petroleum and that's not sustainable so -- Heed the paradox is we need higher gasoline prices to get congress -- comfort converse it.
Conservation without that we won't have you got it okay.
The hot selling names that you are having no trouble moving off the showroom floor what are that.
-- I think they're very straightforward.
Korea some analysts don't know -- -- -- -- yet the Prius is not as guard America right now we're sold out four months.
Also sub compact cars like the fifth and and the birth.
Are selling -- really well in these sub compact cars today.
Are extremely attractive they're not be a -- boxes of the past that -- noisy and Natalie.
That people only bought because of price.
So there's a definite shift away from trucks Indy cars now paradoxically the other big seller is crossover sport utilities.
So we had a migration away from truck.
They sport utilities the car based sport utilities anyway but with this gas situation it's definitely turned into a stampede.
I mean how hard is it for you to get a Chevy Tahoe off the floor I'm just wondering how it would affect your bottom line that there was a meaningful and you hear General Motors and Ford all making.
Major moves after the beginning of -- where they saw a meaningful change in the buying habits of Americans.
Away from those huge cardinals.
Well going into 08 we -- far more risk.
-- an opportunity.
And so we were very conservative on the inventory -- kept our inventories very tight Smart knowing it was a volatile situation and the risk.
Other major -- -- consumer behavior now having said that we still have truck overhang that we're going to have to work through.
And those trucks aren't going to the junk yard there's gonna have to be a price adjustment -- from the manufacturer and the retailer ultimately move those units.
Forward looking now I congratulate.
Detroit for understanding this is -- a powerful structural change and we have to come we have to produce forward looking very different vehicles.
The difficulty is in an industry with -- times -- three to five years to get this kind of consumer preference shift in such a short.
Period of time is extremely difficult Mike Jackson of -- come back again.
Your perspective is highly they'll continue today that the --
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