Autonation: Cars Key to Recovery

On the same day that Automotive News reported an announcement from Toyota Motor Sales North America that it expected 2020 U.S. sales volume for the brand to be about two-thirds of its original forecast, Mike Jackson executive chairman and CEO of Autonation joined a CNBC interview to share inspiring results from the company's latest quarter. "The automotive recovery is underway," he announced.

As for Autonation's results, the company reported same-store first quarter 2020 revenue was $4.7B, down 5%. Same store first quarter 2020 gross profit totaled $812M, down 3%. Same-store variable gross profit was $423M, down 5%. Same store customer care gross profit was $389M, down 1%, with customer pay down 2%.

The real news, though, was Jackson encouraging the auto makers to get back to making cars and increasingly popular pickup trucks, noting a shortage of Chevrolet Silverados, a lingering effect of the General Motors strike, but plenty of Ford F-150s. In its report from earlier in the day, Automotive News reported Toyota U.S. sales down 54% in April and down 20% for the year, with a 116-day supply of vehicles as of May 1 vs. a 77-day supply on April 1.

Jackson of Autonation validated the decline in sales in early April, noting that beginning in April 95% of the company's markets were hit with stay-at-home orders which instantly cratered Autonation sales by 50% in the early part of the month. By the end of April and moving into May, though, Jackson said sales were only off 20%.

Jackson said safety is key including safety for employees and customers. While he dodged a CNBC question regarding testing of his employees, he said employees were required to wear masks and socially distance and that Autonation had implemented a detailed vehicle-cleaning protocol for both sales and service.

The safety measures extend to dropping off and picking up cars, he said. In addition, the company has upped its digital game with 45% of transactions now originating digitally, up from 30% pre-COVID-19. The bottom line, beyond safety, as Jackson sees it: "The customer wants personal space in mobility."

He noted that people are moving around again and they are opting for personally owned vehicles. "They're planning their next vacation and they're looking at destinations that are within driving distance," he said.

CNBC interview: https://www.cnbc.com/video/2020/05/11/autonation-ceo-q1-earnings-covid-19-auto-industry-squawk-box.html