Q&A with AutoNation’s Mike Jackson: Sharing his views on the state of the auto industry

 <span class="cutline_leadin">AUTONATION CEO:</span> Mike Jackson speaks during a presentation at AutoNation headquarters in Fort Lauderdale in a 2011 file image.
AUTONATION CEO: Mike Jackson speaks during a presentation at AutoNation headquarters in Fort Lauderdale in a 2011 file image.

Mike Jackson

Born: 1949, Philadelphia.

Age: 64.

Education: Bachelor’s degree in political science, St. Joseph’s College, Philadelphia. Honorary doctorate, Livingstone College in Salisbury, N.C.

Career: Mercedes-Benz USA, president and CEO, 1997-’99; AutoNation, CEO, 1999-present; AutoNation, chairman, 2003-present.

Family: Married to Alice Lucia Jackson; has a daughter by his first marriage.

Community involvement: Boys and Girls Club; United Way; American Cancer Society; past chairman, Museum of Art Fort Lauderdale; board member, Federal Reserve Bank of Atlanta.

Special to the Miami Herald

For his first job, when he was 10 years old, Mike Jackson swept horse manure from stables on a New Jersey farm. For every stall he mucked out, he was paid a dollar.

Later, with every intention of becoming a lawyer, Jackson was on his way to enroll at Georgetown Law School when his car broke down. Lacking the money to get it fixed, and displaying an early talent for negotiating, he prevailed upon the boss of a Mercedes-Benz dealership to let him do odd jobs around the shop to pay off the cost of repairing the car. He became so intrigued with auto mechanics, the story goes, that he abandoned all thoughts of a career in law and went into the car business.

Now, as the chairman and CEO of AutoNation, the largest retailer of vehicles in the United States, Jackson oversees a vast sales system that operates 269 new-vehicle franchises from 228 stores in 15 states, with revenues that reached about $18 billion last year. Headquartered in Fort Lauderdale, AutoNation says that it sells approximately 500,000 vehicles and services more than 3 million every year.

During a telephone conversation last week, Jackson addressed the state of the auto industry, and his company’s place in it, as the country emerges slowly from the economic freeze of the last few years and, more recently, from an “epic winter” that put a severe damper on car sales everywhere.

Q: How has the unusually harsh winter that’s now ending affected AutoNation's bottom line, and how well is the company — and the vehicle sales business in general — emerging from it?

A: America had an epic winter that disrupted the U.S. economy and the auto industry. Sales were very lackluster, and the thaw didn’t happen until the last couple of weeks of March, when business was phenomenal. During the winter, business got deferred into the spring. My prediction for new vehicle sales is 16 million-plus units for the industry in 2014. The last time it was 16 million was in 2007, before the big crash. In 2009, it crashed to 10 million units. Now that winter is over, there is significant inventory, so incentives will be very attractive going into the spring.

Q: How did your company adapt to the economic downturn that began in 2008, and what did AutoNation learn in the ensuing years that helped the company weather the downturn and emerge as strong as it is now?

A: In 2008, America had a financial catastrophe. There was a depression in the auto industry. But we were determined to come out of the crisis much stronger, particularly relative to our competitors, and we were determined to keep the best people and the best talent in the company. We continued investing in new facilities and new capabilities, and we dramatically outperformed the competition during the crisis.

Q: Since auto sales are viewed as key indicators of consumer spending, how confident are you that the economy is truly on a rebound? Is there anything in the numbers you’re seeing that gives you pause?

A: There are bright spots in the economy: first, energy, where fracking has opened up new opportunities — it’s been revolutionary; secondly, housing, where an excess of inventory and properties in foreclosure are well on the way to being cleared; third, the auto industry, which continues to show year-over-year growth; and finally, innovation, whether in Silicon Valley or elsewhere, an area in which America leads the world. So there are some bright spots in this economy that give me confidence that it will continue to grow.

Q: In the folklore of American commerce, “car salesmen” were long viewed, fairly or not, as glib and underhanded, willing to foist clunkers on unsuspecting customers. While that often comical perception emerged mostly from the used-car sector, can you address how the industry in general has fought that idea, and do your sales people still confront a certain measure of mistrust from the public?

A: The world has changed, and the tables have turned. The customer has been empowered by digital, and spends five to 10 hours of research before buying a vehicle. They are very well prepared. They feel empowered by knowing what they want and what is a fair price to pay for it. That has facilitated a much faster sales transaction, and the sales representative is there to resolve any open questions. It’s a very different process from the cliché of a decade ago. I think that’s very healthy for the industry and for consumers.

Q: In that same vein, how do all these recalls from manufacturers affect business? Do they serve to reinforce some consumers’ belief that car makers and dealerships can't be trusted? How do you deal with that?

A: There are 20 to 25 million recalls a year in the United States, and I think there will be even more in the future. The margin is getting narrower — if in doubt, recall. We have the technical expertise to execute the recalls on behalf of the manufacturers, and to make sure that the recall is as convenient for the customer as possible. The industry systematically identifies anything that could be a concern and systematically addresses it. I don’t view recalls as a negative; I view recalls as a proactive safety measure. A vehicle has 50,000 parts — absolute perfection will never be accomplished on something as complicated as a car.

Q: What can you say precisely about the company’s plans for the future? Expansion overseas? China? And what about Europe, where huge manufacturers like PSA Peugeot Citroën are facing great difficulties?

A: We are a U.S.-focused company and will remain so. We represent all the manufacturers in the U.S., and we will continue to grow the business organically in the U.S. and with acquisitions. I have no intention of taking on the additional risk of trying to figure out how to sell to consumers in China and Brazil.

Q: What accounts for AutoNation’s success? What did it do, specifically, to set it apart from similar companies?

A: The talent we have within the company is the best in the industry. We long ago defined the characteristics of the associates we wanted in the company, and we have systematically hired to that profile for my 15 years in AutoNation. My partner, Mr. [Mike] Maroone, and I are committed to giving our customers a peerless experience, and we have built a brand, AutoNation, that is differentiated in the marketplace coast to coast, with a transparent, customer-friendly experience that is backed by guarantees that are tangible. And we have systematically done that over 15 years, and nobody else has.

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