AutoNation Resists GM, Chrysler Vehicle Order Pressure
29 Janeiro 2009 - 4:33PM
Dow Jones News
AutoNation Inc. (AN), the nation's largest auto retailer, is
pushing back against efforts by General Motors Corp. (GM) and
Chrysler LLC to prop up vehicle sales by trying to get dealers to
order more cars and trucks.
Facing deep sales declines, GM and Chrysler are promising more
cash and perks to those dealers that order more vehicles.
The automakers, surviving on $13.4 billion in federal loans,
have until March 31 to prove their businesses are viable or risk
losing the money. Part of making that case involves slowing
dramatic sales slides in the U.S.
GM and Chrysler "have implemented wholesale incentive programs
where they basically say to get the incentives for the inventory
you want, you have to buy more inventory," AuoNation Chief
Executive Officer Mike Jackson said Thursday in a conference call
to discuss fourth-quarter financial results.
"I think this is the wrong thing to do," Jackson said. "We are
not playing that game."
Jackson said GM and Chrysler are trying using rich incentive
programs to persuade dealers to order more vehicles. Many
manufacturers are pushing for more vehicle orders, he said, though
GM and Chrysler are the most aggressive.
Chrysler executives this week launched a cross-country tour in
which they will plead with dealers to order roughly the same number
of vehicles as they did toward the end of last year despite the
deepening sales slump. GM, in a meeting with dealers last week,
also asked them to keep buying new vehicles.
AutoNation's fourth-quarter sales tumbled 34% as the slumping
economy, growing unemployment and lack of access kept consumers out
of showrooms.
The retailer is planning for a market of 10 million seasonally
adjusted vehicle sales through March, a 24% reduction from last
year's already-depressed levels.
"We do believe that there's the possibility of an improvement in
March if credit really begins to thaw, but we are taking a
wait-and-see attitude," Jackson said. "We want to see it before
we'll stop at that level."
AutoNation, with 230 dealerships in 15 states, on Thursday
reported net income of $67.1 million, or 38 cents a share, up from
$51.7 million, or 28 cents, a year earlier. Results for the latest
quarter included a net 26 cents in gains. Revenue dropped 34% to
$2.74 billion.
Falling auto sales and financial woes that pushed GM and
Chrysler to the brink of bankruptcy last year are weighing heavily
on auto dealers.
Auto sales have slumped as the housing crisis, rising
unemployment and credit crunch have damped consumers' appetites for
large purchases, with 2008 industry sales hitting levels last seen
in the early 1990s. This year is expected to be even worse.
AutoNation expects 2009 industry sales of about 11 million,
compared with nearly 13.5 million in 2008.
-By Sharon Terlep, 248-204-5532; sharon.terlep@dowjones.com.
(John Kell and Shirleen Dorman contributed to this report.)
Click here to go to Dow Jones NewsPlus, a web front
page of today's most important business and market news, analysis
and commentary. You can use this link on the day this article is
published and the following day.