AutoNation chairman encouraged by appeal of new vehicles

January 11, 2006

By TERRY BOX / The Dallas Morning News

DETROIT – This year's Detroit auto show featured so many attractive new vehicles that sales should remain high and costly incentives may drop.

That was the assessment Tuesday of Mike Jackson, chairman and chief executive of AutoNation Inc., as the North American International Auto Show's three-day media preview ended.

"I think this is one of the best shows ever in Detroit," he said. "It's a continued celebration of the product revolution."

AutoNation, with 347 new-vehicle franchises in 17 states, is the biggest buyer and seller of new vehicles in the country. The publicly held company had $19.7 billion in revenue last year.

As a veteran observer of the shows, Mr. Jackson said he's encouraged about the prospects of Ford Motor Co. and General Motors Corp. and optimistic about the overall state of the industry.

He believes that annual new-vehicle sales will remain between 16 million and "the low 17 million range," where they have been for the last several years.

And, unlike some industry analysts, Mr. Jackson thinks sales are moving toward being product-driven rather than incentive-driven – in other words, that an array of appealing new cars and trucks will attract buyers.

As an example, he pointed to GM's announcement that it will start a new pricing strategy today that will ultimately lower the prices on most of its vehicles by $1,000 to $2,500. That move is seen as a way to wean the company off using costly incentives.

GM probably wouldn't take that step if it weren't confident about its new vehicles, said Mr. Jackson, who has criticized domestic automakers in the past for their heavy reliance on incentives.

One of the hottest concept vehicles at the show was the Chevrolet Camaro. Although the company has not decided whether it will produce the car, Mr. Jackson said the concept indicates the depth of the automaker's design talent.

"The talent exists at GM to design great cars," he said.

And as the Detroit show illustrated, good – even great – examples of new vehicles were evident everywhere, Mr. Jackson said.

In the subcompact class – a segment that's often ignored – Honda unveiled its Fit sedan and Nissan its Versa. In crossovers, Dodge had the Caliber and Ford the new Edge. While Chevrolet unveiled the Camaro, Dodge had the equally exciting Challenger concept pony car.

In the mainstream, midsize sedan class, Toyota introduced its 2007 Camry, adding style, performance and more content to a car already admired for its capabilities.

Among trucks, GM displayed its new full-size 2007 SUVs, while both Lexus and Mercedes-Benz introduced new top-of-the line luxury cars in the Lexus LS 460 and S-Class Mercedes.

"In the past, we've had one or two segments with exciting new products," Mr. Jackson said. "This year, it was everywhere. Incentives are still too high, but I believe they will begin to stabilize."

Some analysts were less enthusiastic.

"I think some of these vehicles will help the domestics for a few months," said Wes Brown of industry consultant Iceology in Los Angeles. "But I think they are going to continue to struggle. If you weren't on shoppers' lists to start with, I'm not sure that many of these vehicles will be strong enough to get them back on the list."

Jack Nerad, executive editorial director and executive market analyst at Kelly Blue Book, said he left the show "feeling better about the industry as a whole and the domestics than I did before the show."

"The bar just keeps getting raised higher and higher."

E-mail tbox@dallasnews.com